Orion Realty Hunts Property

Brandon Rogers has been on a spending spree.

In the last year, the firm he manages — Orion Real Estate Services of Springdale — has purchased $33.9 million in investment properties. In the last two years, the group has developed commercial and multifamily properties valued at about $46 million.

Orion is probably best known as the exclusive listing agent for the gated Clear Creek subdivision in Johnson and its development of Clear Creek Tower I (which is technically in the Johnson city limits but has a Springdale mailing address). The company is out to make money for its investors with a diversified portfolio. It’s an eclectic mix of old and new apartments, retail and office space.

Rogers, a one-time astronomy buff, said the firm’s name is a reference to the Orion constellation. In the night sky, Orion the hunter mimics a man holding a bow and arrow. The firm’s goal, he said, has always been to hunt out the best properties for investment and the best land for development.

Now that the 5-year-old company has its sea legs, Rogers is finally willing to share his plan about hunting big game in the Northwest Arkansas real estate market.

“Our investment objectives are proven real estate that’s either office, retail or multifamily,” Rogers said. “Something that we can physically manage, collect the rent … pay the bills … get the phone calls.

“For every 50 deals you look at, one or two may make sense,” he said.

Turning Point

In August of 2005, Orion started purchasing “under utilized” retail centers and apartment complexes. So far, all of them are in Washington County, including places like the Evelyn Hills shopping center in Fayetteville and Johnson Switch Townhomes in Johnson.

They’re an investment, Rogers said. Proven income streams with an additional way for investors to make money: a lower interest rate.

Many of the properties Orion has purchased in the last year have been acquired with traditional bank debt, but re-financed by an option that gives the group a fixed interest rate for 10 years. The financing is tied to a 10-year treasury bond, and the rate is lower than retail bank financing, Rogers said.

The going bank rate as of early August was about 8.25 percent on a commercial loan, but Orion can get the rate fixed for about 6 percent or 6.1 percent, he said.

“So two and a quarter on return is huge,” Rogers said.

Of course, the less the company and its investors pay in interest, the more they pocket.

The catch?

The financing can take several months to line up, and it’s a painstaking task.

“We’ve got to really be accountable to the underwriting criteria,” Rogers said.

Also, the group will have to refinance the loan in 10 years. But Rogers said Orion will start looking for refinancing options two years before the bond expires.

“It’s the new trend,” Rogers said. “Not many people are doing it up here.”

Payne Brewer is the executive vice president and the loan manager for Arvest Bank-Fayetteville. Brewer, who is not associated with Orion, said the financing option can be a “grueling process” because the secondary market lenders want detailed documentation on everything about a property. He has seen six inches of paperwork on a simple multifamily property, he said.

Brewer couldn’t speak about savings on interest rates because they fluctuate from day-to-day. The time and money involved in that type of financing can make a deal not worth it in some instances, he said.

“It’s not for everybody,” he said.

Many of the properties Orion has acquired in the last year have come from Mathias Properties Inc. of Springdale.

Sam Mathias, owner of the company, said he wanted to sell a few of his older properties and roll the gains into new developments and new purchases.

“The timing was right for me and it just worked out,” he said.

Gerald Johnston, former chief financial officer of Tyson Foods Inc., is an investor in some of Orion’s projects, though not in the older properties.

He said it’s too early to tell what his return on investment will be, but that it appears the there is “real potential.”

New Developments

Orion continues to develop land at the intersection of I-540 and Greathouse Springs Road, an area with multiple intersecting boundary lines between the cities of Johnson, Springdale and even Fayetteville — all with different water supplies, school districts and mailing addresses.

Despite invisible lines from town to town, a survey done for the group found that 16,500 cars pass through the intersection each day, with more than 70,000 cars passing along I-540. That’s why Rogers is developing Shoppes at the Mill, a planned 16-acre, 100,000-SF retail development across the street from the Inn at the Mill in Johnson.

The group has been filling the area with dirt from its Clear Creek apartment project up the road (technically in Springdale). Rogers hopes to break ground on the first 15,000-SF building in October.

“Right now, we’re pitchin’ this hard,” he said.

Orion is talking with retailers, coffee shops, at least one bank and trying to land a grocery store for the area, he said.

No deals have been signed.

Orion will also develop a 260-acre master planned residential community in Farmington, which is just now in the beginning stages. Rogers said it is probably a five- to six-year project.

Rogers wouldn’t say how much revenue the firm made in 2005, just “we’ve made enough to pay the bills.”