Beverly Hills Real Estate Investment Firm Latest to Target Northwest Arkansas

Add a Beverly Hills-based investment firm to the list of those seeking to capitalize on the growth of Northwest Arkansas.

And this particular strategy involves making the private company a major player in the multifamily real estate market — in two years.

RPD Catalyst LLC, a $350 million dollar company which invests in real estate assets throughout the country, added to its growing portfolio of multifamily properties by acquiring a development on the west side of Springdale for $7.15 million.

RPD Catalyst LLC paid $52,573 per unit for the 136-unit The Vineyards at Jones Road development at 7263 Napa Valley Lane, just off Jones Road near Har-Ber High School.

The purchase was made in the name of Catalyst Vineyard LLC. Arbor Commercial Mortgage LLC, a Fannie Mae loan originator, provided the debt and RPD Catalyst provided the equity. 

Maxus Properties of North Kansas City, Mo., through its Prime Lending VI LLC entity, was the seller.

Jerry Webster, an apartment broker in Little Rock and owner of Webster Corp., assisted RPD in the transaction. First National Title Co. of Fayetteville closed the sale.

 “When we make an investment in an area like Northwest Arkansas, it would be very rare for us to make one investment,” said Scott C. Dew, president and CEO of RPD. “That’s not very efficient for a company of our size. So we’re actively looking to build a portfolio of apartment and multifamily projects in Northwest Arkansas. We’d love to [acquire] five or six properties in this area in the next couple of years.”

Dew said there are no developments under contract and conceded the picking of properties may be difficult.

Still, he does know the lay of the land, and believes superior on-site leasing and management personnel will be crucial to his company’s success in Northwest Arkansas.

“It’s tough when Lindsey owns most of the apartments,” Dew joked, referring to market leader Lindsey Management Co. of Fayetteville, the state’s largest property management firm. “But we think we can blow their doors off on the management side without blinking. And that is really a focus for us on the management side. To provide a high quality of management.”

Dew is the “D” in the three principals/co-founders of RPD. The others are Nathan Rubin, a practicing cardiologist, and Richard Pachulski, an attorney and founder of The Private Bank of California.

RPD was founded in 1994, and Dew explained the firm has only recently started transitioning its acquisition efforts.

“We have traditionally been a buyer of office and retail properties, primarily in the Midwest and South,” he said. “We actually looked in Northwest Arkansas for retail properties many years ago and couldn’t find anything we liked. But we’ve switched our focus now and are buying apartments almost exclusively and selling our retail off.”

RPD’s multifamily portfolio currently includes about 1,200 apartment units, “but that is growing rapidly,” Dew said.

And because prices for properties in California are astronomical, RPD set its sights to other markets where prices offer a better yield for investors, and where the picture for growth remains positive.

In Arkansas, RPD acquired 68 single-family homes in Little Rock, Cabot, Benton and Bryant about two years ago. From there, the company turned its attention to Northwest Arkansas, which remains one of the fastest growing areas of the country.

In fact, a recent report from the Northwest Arkansas Council said the region’s rate of growth ranked 24th in the nation among metropolitan statistical areas between April 2010 and July 1, 2013.

“What we see in Northwest Arkansas of course starts with Walmart and we’re liking what we are seeing in terms of moving employees to the area,” Dew said.

The 7.14-acre Vineyards development was built in 2005 and its most recent appraisal was $5.1 million.

Amenities include a playground, dog park, business center and clubhouse.

The current occupancy rate is 95 percent.

Floor plans range from one-bedroom apartments at 850 SF to three-bedroom duplexes at 1,250 SF.

Dew seems willing to do what it takes to attract the right kind of tenant to the Vineyards. He said RPD will invest an additional $600,000 to paint the entire property, add trees and other landscaping and upgrade the units.

The Vineyards location, west of Interstate 540, was a key feature of the property, Dew said. He hopes the proximity will help RPD’s efforts to shape the property into more of an upscale community.

“We think we can upgrade our tenant profile by tapping into a lot of the people in the community,” Dew said, mentioning neighboring schools and health care facilities. “We’d love to have teachers or people who work at the health facilities nearby. We’re really going to focus on creating a community there that really taps into the local people and feeds off the local action that is there on the [West] side of [Interstate 540].”