The Siegel Group, A Commercial Real Estate and Business Development Company
 

IN THE NEWS

Las Vegas Business Press
November 29, 2007

Siegel Group Continues Buying Spree

By Tony Illia

Third quarter sales in Southern Nevada's apartment market slowed amid diminishing inventory and lack of new construction.

The slowdown is in response to a softening single-family home market as well as rising land and construction costs. More than 200 apartment buildings, about 11,196 units, sold in the third quarter or 46 percent less than a year ago, reports Michael Belnick, an apartment specialist with ReMax Central Commercial. Only $1.2 billion in sales - a 31 percent year-to-year drop - were reported. Despite the dramatic decrease, median sale prices still increased six percent to $107,400 per unit.

"We are seeing drastic sales declines even stronger than the residential market," Belnick said. "However, there are low interest rates, temporary housing needs and the potential for added values."

While four-plex and five-to-99-unit apartment complexes saw dramatic sales drops in the third quarter, activity remains robust for some product types. Complexes with 100 units or more, for example, saw strong sales with 8 percent annual price increases to $110,700 per unit. The Siegel Group, for one, has gone on a buying spree this year, most recently acquiring 5-year-old, 225-unit Emerald Suites Tropicana at 3890 Graphic Center Dr. The group paid $20.25 million, or $90,000 per unit, to Las Vegas-based Mona Co. Development. Siegel, a Studio City, Calif.-based firm, now has 11 properties in the valley, totaling 2,500 units.

The company acquires aging, mismanaged or undervalued properties that are quickly converted and branded into "flexible-stay" properties. Siegel Group president/CEO Stephen Siegel claims the properties become cashflow positive within 90 days after acquisition.

"We put our business model on land that we think will appreciate quickly," Siegel said. "Most of our properties are close to Downtown, the Las Vegas Strip and the Boulder Highway corridor."

The Las Vegas Valley apartment market inventory consisted of roughly 181,085 units in the third quarter, with a 7.7 percent vacancy rate. Yet the valley is still seeing roughly 5,000 new residents a month attracted by the region's low taxes and job market.

"We are experiencing a slower real estate investment market for residential income properties than most markets," said Belnick. "But we will not be as affected as much as areas like San Diego or Phoenix due to our job and population growth over the next several years."