Prime Income Asset Management

Owner managersCompany president Daniel Moos tells Martin Ashcroft how a diversified portfolio and a hands-on approach make Prime Income Asset Management a property business with a difference. We manage what we own, and we own what we manage,ÔÇØ says Daniel J. Moos, about Prime Income Asset ManagementÔÇÖs business model. ÔÇ£One of the reasons we excel at what we do is because we own and manage our assets. We live and breathe it every day. Whether itÔÇÖs a piece of land that weÔÇÖre trying to develop or an apartment building, weÔÇÖre directly involved. As a result, we outperform other comparable projects by virtually anyone else in the industry.ÔÇØBased in Dallas, Texas, Prime Income Asset Management and its affiliates manage an excess of $3.5 billion in assets. The majority of PrimeÔÇÖs income is derived from management services provided to two affiliated public companies, American Realty Investors (ARL) and Transcontinental Realty Investors (TCI), with an emphasis on enhancing shareholder value. In its role as asset manager, a select team of professionals directs the day to day operations, acquisition, disposition, leasing management and financing of the portfolio properties. Prime also provides all the accounting, operational and financial reporting as well as regulatory and compliance reporting.If you believe the sound bites, youÔÇÖd think the real estate business is on its last leg; but the most significant impact has been on single family housing. Conversely, there is nothing ÔÇÿsub-primeÔÇÖ about Prime. ÔÇ£We have four major thrusts,ÔÇØ says Moos; ÔÇ£commercial buildings, residential apartments, hotels and land development.ÔÇØ The key to PrimeÔÇÖs operating success is strategic management and direction from the executive group, as well as hands on day to day management at the asset level. ÔÇ£Through Regis Property Management we stay focused on each commercial site. Within our residential properties, consisting of over 22,000 units, we augment the Prime asset manager with local external management companies,ÔÇØ explains Moos.┬á Another key to PrimeÔÇÖs excellence in achieving value is through its land development group. ÔÇ£Though we have a dedicated internal group working on land development, we also work closely with a solid group of independent developers. For example, ICON Partners has some amazing projects under development. Most of ICONÔÇÖs projects are in the greater Dallas area and when completed will have a dramatic impact on the city,ÔÇØ says Moos. ÔÇ£WeÔÇÖre also working on a unique project with MJS Realty Inc., founded by Mark J. Small, on a significant downtown Jackson, Mississippi revitalization plan. We have a great cooperative relationship with the city of Jackson and the state of Mississippi.ÔÇØ Although Prime is not in the single family housing market directly, the housing crisis has had both positive and negative effects on the business. ÔÇ£That market is in distress,ÔÇØ confirms Moos. ÔÇ£But a significant portion of our portfolio is in apartments, and our apartment business is very strong as people move away from single family homes. If they canÔÇÖt get mortgages, or have lost their home, they still need a quality place to live.ÔÇØPrime does have some land on which there are single family lots for sale to home builders. ÔÇ£That part of our business has been impacted by the slowdown in new single family housing,ÔÇØ says Moos. ÔÇ£We are seeing a downturn in how quickly we can sell these lots in some of our subdivisions. However, Texas still remains one of the most viable housing markets in the country.ÔÇØHaving a diverse portfolio has served Prime well. There is another thrust too, connected with land, that stretches the traditional definition of real estate beyond its usual boundaries, but which has proved to be a good fitÔÇöenergy. ÔÇ£Through our affiliated oil and gas companies there are mineral rights that have significant value,ÔÇØ says Moos. ÔÇ£The energy sector is very strong and has proven to be an excellent investment.ÔÇØThese affiliated companies have mineral rights of over 16,000 acres in Texas, and 12,000 acres in Arkansas, but a massive 1.3 million acres in France, with 800,000 acres in Poland, 115,000 acres in Bulgaria, and a more modest 120,000 acres in England.Real estate and energy at first seem an unlikely mix, but it takes only a little lateral thinking to see the connection. ÔÇ£It depends on your definition of real estate,ÔÇØ says Moos. ÔÇ£We do things that are either on the ground or below the ground. In the traditional sense of real estate, you build on it. But there is value underneath the real estate too, and weÔÇÖre taking advantage of that.ÔÇØPrimeÔÇÖs founder and strategic advisor, Gene E. Phillips, is also chairman of Balkan Energy LLC, a company he originally formed to provide power to Albania and other Balkan countries. Balkan is now doing the same in Africa with the refurbishment of a barge-mounted power station in Ghana which will soon deliver 125 megawatts of power. Phillips also recently met with His Excellency Lapologang Caesar Lekoa, the Ambassador Plenipotentiary and Extraordinary of Botswana, to discuss possibilities for energy relief there.ÔÇ£Gene PhillipsÔÇÖs strategy is to have a core of businesses that are diversified,ÔÇØ says Moos. ÔÇ£He has real estate companies that are diversified within real estate, and energy companies that are diversified within the energy sector as well.ÔÇØPrimeÔÇÖs real estate investment strategy is to identify and acquire undervalued or under-performing assets and transform them to create long term above-market returns. After acquisition, the value of the investment is maximized through enhanced tenant/resident services, capital improvements and an aggressive leasing and asset management program.ÔÇ£WeÔÇÖre about building value,ÔÇØ says Moos. ÔÇ£When we buy an asset we build value through a well thought out operating and development plan tied specifically to that asset. Through our aggressive execution of those plans we get to know our tenants and work closely with them to enhance the property.ÔÇØ PrimeÔÇÖs team and its affiliates of over 200 professionals are departmentalized, he says. ÔÇ£Our business is a matrix model with employees dedicated to defined areas of responsibility. Our people are very focused. ItÔÇÖs a highly talented, very experienced team, and we incentivize our people for success.ÔÇØMoos sees the apartment business and land development as the two areas having the greatest growth potential, so Prime is developing new apartment complexes and exciting multi-use properties in Texas, Louisiana and Mississippi where there is strong employment growth. He cites the companyÔÇÖs recent experience in New Orleans as an example of its flexibility and its ability to turn a challenge into an opportunity. As a result of hurricane Katrina, some office buildings Prime owned in the city suffered damage. Also as a result of the storm, there was insufficient demand to reopen them all as offices, so two of them are being converted to apartment buildings.Although it has a broad base of assets, Moos says Prime is still a compact organization. ÔÇ£We are very nimble and can turn on a dime; itÔÇÖs not a bureaucracy here. We have a very effective management team who make timely decisions.ÔÇØ PrimeÔÇÖs largest current project is Mercer Crossing, a 1,200 acre mixed-use development in the geographic heart of the Dallas/Fort Worth metroplex. Mercer Crossing is jointly held by ARL and TCI and is located at the three-way intersection of I-35, I-635, and the President George H. Bush Turnpike, just minutes from downtown Dallas and the areaÔÇÖs two major airports. The Mercer Crossing master plan (available for review at www.MercerCrossing.com) provides for a town center, office complex, retail space, hotel, and multi-family site. It is currently home to the Laguna Vista Apartments and the luxurious mid-rise Portofino at Mercer Crossing. The development also includes three million square feet of office space, currently occupied by: One Hickory Centre, Two Hickory Centre, Four Hickory Centre and Fenton Centre I and II. Three Hickory Centre is scheduled to break ground this year. The Hickory Centres, which are at a 92 percent occupancy level, were named in honor of the original Mercer ColonyÔÇÖs abundant hickory trees and the Fenton Centres were named in honor of Charles Fenton Mercer. Mercer CrossingÔÇÖs Hickory Centre also serves as the headquarters for Prime Income Asset Management and the public companies it advises. Under the visionary guidance of Gene E. Phillips, Prime Income Asset Management began buying land in the area nearly a decade ago with the idea of creating a vibrant new urban environment. ÔÇ£Our advisor has an uncanny knack for finding long term value opportunities, as is the case with Mercer Crossing. There is no-one smarter than Gene Phillips when it comes to knowing when to buy and sell assets,ÔÇØ says Moos. ÔÇ£He also instills the confidence and desire to succeed. The guy is a genius.ÔÇØ┬á