08.13.04
AMC Delancey model favors buy and hold

Philadelphia Business Journal
From the August 13, 2004 print edition

Adam Lewis, Special to the Business Journal – Delancey Realty Services Inc. of Philadelphia joined forces with The AMC Group in January of 2001, creating a business model that quickly differentiated itself from other real estate companies.

By infusing Delancey Realty with much-needed capital, the new AMC Delancey Group Inc. was able to uphold the real estate principles so important to AMC Delancey CEO Ken Balin.

"Until [the time of the merger], most of the transactions we had acquired were from raising individual capital from high net worth customers," Balin said. "With this new structure, this process of bringing in new capital will include more family money in our investments."

Balin prides himself on AMC Delancey's ability to invest both its own money and investors' cash carefully, while producing profits.

"We're best in class in the way we underwrite and perform due diligence; we want to understand our real estate investments," he said. "Through that diligence and care and with a good plan, we can achieve superior results. Our program has been tested now investing our money and other people's money."

Balin said AMC Delancey's approach to investing makes the company unique when compared to competitors such as Berwind Property Group.

"If you think about the amount of capital chasing real estate today, much of it is short term in this nature," he said. "There are very few larger institutionally-based companies that are providing long-term equity capital for investments. Real wealth in real estate has been made over generations by finding property and holding it."

AMC Delancey's customer base of predominantly high net-worth families allows it to hold on to properties longer.
"They can have a holding philosophy with their real estate that is longer-term in nature, and therefore, it becomes easy to truly align interests with our real estate operating partners, who are looking to create value for themselves for the long term," Balin said.

The AMC Group is a management company for a privately owned portfolio of financial investments. The group also owns The Goddard School for Early Childhood Development, a national chain of child-care centers with headquarters in King of Prussia and Philadelphia Gear Corp., a manufacturer in Norristown.

The company focuses on the office and multifamily property markets, although it also owns retail properties and three hotels, located in Harrisburg, Springfield, Mass., and Jacksonville, Fla.

"In general, the office market has gone through some difficult times over the past few years, and I think now that employment is increasing and the economy is getting stronger, the office market will be getting stronger, albeit slowly," Balin said. "On the multifamily side, the downtown core is very strong and continues to be strong."

The company is also looking for opportunities to expand its operations.

"Over the next five to 10 years, we expect our portfolio to be a more national portfolio," Balin said. "Over the next few years, we'll be exploring investment opportunities along the East Coast."

AMC Delancey owns 35 properties in six states, stretching from Massachusetts to Florida. The company, however, has concentrated most of its work in Pennsylvania.

"The company has a very clear strategic focus in that what we're doing today is identifying and evaluating and then partnering with strategic operating partners who have a very clear focus on the type of investment that they do," Balin said. "We're providing capital and resources for them in order to co-invest together."

Balin places an emphasis on knowing the area in which the company invests.

"We believe that real estate is fundamentally a local business, and that investment in local geography without a local partner is a risky transaction," he said.

To this end, AMC Delancey worked with Ross Investment and Development Co. of Bethesda, Md., to acquire a multifamily property in the Washington, D.C., market in June. Ross focuses on multifamily real estate in the metropolitan Washington region.

"Ross has what we would describe as market competition," Balin said. "They really understand the detail and nuance of the metro Washington, D.C., market, and it allows us to be able to invest selectively and carefully with experienced professionals who, like us, are active leaders who can produce value through the positional or operational growth."

Ross and AMC Delancey's joint venture resulted in the acquisition of the West Deer Park Apartments, a 198-unit apartment complex in the growing Washington suburb of Gaithersburg, Md.

Ross Development's president, Scott Ross, said the companies' relationship grew quickly after he and Balin were introduced by a mortgage banker in New York.

"After a good number of months, we looked at a few deals, and we decided to go after one," he said. "They are professional, knowledgeable and, quite frankly, delightful people to work with. They are people who assess a deal quickly and efficiently and then spend the time to properly structure it."

Ross said his company and AMC Delancey are exploring the potential for further joint ventures.

"We're looking at a number of things right now," he said. "We're working on some things now that may turn into opportunities together."

Another project that Balin is proud of is AMC Delancey's acquisition of the Gettysburg Village Factory Stores in Mount Joy, Pa., a 260,000-square-foot factory shopping outlet center that opened in 2000.

"It's supposed to look like downtown Gettysburg, and it's a very pleasant, livable streetscape," he said. "Collectively, the stores there employ about 480 people, making it the largest employer in Adams County."

Gettysburg Village officials praised AMC Delancey for its work on the center.

"They're very hands-on and very responsive," said Nancy Brown, Gettysburg Village's general manager. "The creativity of the people that work here is wonderful. There's a lot of thought put into their work, and the creativity in their corporate office is responsible for all of it."

Balin said the property is reminiscent of Bucks County in its small-town charm.

"It's a terrific development. If it were in Philly, it would win awards," he said.

Brown agreed that the building's design blended well with the area's local geography.

"They've fit into the local environment, just from the architectural style of the buildings," she said. "They're a good fit in Gettysburg."

© 2004 American City Business Journals Inc.