Racing or racking up deals, Larry Connor grows business

Larry Connor doesn’t sit still for very long.

As you’re reading this, the managing partner of Miami Twp.-based Connor Group is competing in the Baja 1000, a four-day off-road race in the Mexican desert.

And the company he leads marked its largest transactional day recently with the closing of four new acquisitions and 10 financings totaling $618 million — a record.

The transactions that day included properties in Denver, Dallas, Atlanta, Raleigh, Chicago and Dayton.

The Connor Group finds promising apartment properties that company leaders believe are poised for future appreciation. They acquire the properties, focusing on customer service and improvements, then sell them when the time is right.

That approach doesn’t work unless residents are happy.

“One of our absolute cornerstones is to have a high resident retention,” Connor said. “Which means after they’ve been a resident for a year, they’ll renew — which creates less turnover, which means higher occupancies.”

Since its founding in 1992, the Connor Group has grown from $0 to more than $2.2 billion in assets.

With the recent deals, the real estate investment firm said it will return $40 million to investors and partners. The company also will save more than $5 million in interest expense while adding 994 apartment units to its portfolio.

“We’ve always believed in being the best, not the biggest,” Connor said.

Still, the company’s goals are undeniably big. Connor Group leaders have set a strategic goal of completing $2.5 billion in annual transactions by 2022.

The company said the large financing deal also allowed it to purchase a “B-piece” of Freddie Mac-backed apartment loans, something the Connor Group says is a growing trend.

The company called the B-piece purchase — described as a secondary tranche or portion in a commercial mortgage-backed security — as a “natural step” in growing its strategic debt program.

Freddie Mac bundles loans to buyers of apartment properties in pools and sells those loans to investors. The B-piece is the riskier slice of the investment pool, accounting for about 7.5 percent of total loan balances.

B-pieces are not guaranteed by the U.S. government — but the returns are higher.

Asked if achieving the largest transaction deal milestone was something the company had been working toward, Connor said it was no accident. The company had been working with Freddie Mac — the large multi-family lender — to craft a deal that would offer good interest rate protection and some flexibility.

“We’ve actually been working on that specific type of loan for a couple of years,” he said.

The idea is to think long-term, Connor said.

Interest rates are going up, which is something the company has expected for a while. Values in some sectors are going down, which will create buying opportunities, as far as Connor is concerned.

The company owns and operates luxury apartments in Ohio, Austin, Nashville, Atlanta, Minneapolis, Chicago, Charlotte, Raleigh-Durham, Dallas and Denver.

All those locations mean company employees travel a lot. The new $5 million, 14,597-square-foot hangar next to the company’s headquarters off North Springboro Pike is impossible to miss.

“We operate in 12 cities around the United States,” Connor said when asked about the hangar. “We’re getting ready to expand into our 13th city, which is Tampa-St. Pete (Fla.). And we plan on adding two to three more cities in the next three to four years.”

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