By Tim J. Randall
In every sphere and industry there is the consummate turnaround artist. Financial institutions have their workout professionals, interim CEO’s perform 180 degree transformations, product and service companies have their re-branding consultants, and politics has the spin doctor. Similarly, the principals of Deco Communities have placed their firm in a fascinating subset, as the premier turnaround expert for distressed multifamily “C” properties in “A” & “B” locales.
Deco Communities was born in 2011 from the minds of its partners Robert Lyles, Patricia Watts and Dan Richards. The triumvirate previously was the management team at Starpointe Communities, a condominium development company in Arizona with more than 3,500 units and numerous mixed use and commercial projects. The Bridges at Ocotillo, Tapestry on Canal, and Cobalt on 32nd Street stand as examples of the team’s 15 years of development. As the economic paradigm for the multifamily market changed over the past five years, the trio looked for new opportunities on which to capitalize. In December 2010, Deco Communities was formed with a niche infill mission in “C” property amidst “A” & “B” space.
Making It New
Lyles and his team saw an opportunity to redevelop neglected and underutilized properties. Lyles says he wanted Deco projects to “create energy” and exude a colorful and emotional concept that spoke to a certain demographic: Generation Y. These were the recent graduates, the first-time job holders and individuals who had a sense of community. The first projects were labeled the Cabanas and involved a branding excursion to change the identity of the property into a “Jimmy Buffett-Tommy Bahama deal.”
The opening salvo was an existing 150-unit complex at 24th Street and Camelback Road. Deco purchased it from J.P. Morgan Chase for $5.1 million. The company then put $900,000 into it and sold the property 18 months later for $9.1 million. At that time, the deal would have been a near impossible financing arrangement given valuations, lending standards and housing uncertainty. However, the Deco team utilized cash in the purchase, and as such the process of redevelopment and Cabana branding were proven to work. Going
forward, financing has not been a concern given the success of the initial project and the typical time for a reconstitution – 24 to 30 months. As such, Deco has Cabanas at McClintock, Thomas, Mill, Dumont, and At The Pointe.
Lyles is extremely proud of the Cabana projects and credits the Deco team for the ongoing success. Watts and Richards are Lyles’ partners and trusted confidantes, but to pull off the transformations Deco needed a Generation Y advisory staff of decorators, marketers, social media experts and researchers.
“Each building has its own fire, but elements of the Cabana brand are consistent throughout: a community pool with a signature Cabana-style structure, a fitness center and charming launderette concept called Sudzys,” Lyles says.
In many ways, the Deco projects are an extension of the expertise of Lyles and his team but also their passion, energy, insight and timing. Lyles describes his journey in real estate as “getting on a number of rolls” at Century 21 and Clifton Investment Company. One of those momentum turns was interacting with Watts of Anthem Properties across multiple transactions and then joining forces at Starpointe with her role as operations and financial partner. Later, Richards joined the Starpointe team and provided the engineering expertise to undertake significant projects and opportunities.
Moving forward, these three principals look to expand the Deco name in Phoenix and across the Southwest with a new venture in Las Vegas. The story of Deco will play out over the coming years, and the company’s projects will aim reflect the vigor and excitement the principals share over their brand and the multifamily space. A turnaround story is only as good as a successful outcome; in this niche multifamily space, the Deco team is the go-to artist.