1. FREEMAN WEBB COMPANIES
ENERGY EFFICIENCY: THE MULTIFAMILY BUSINESS
STRATEGY
JULY 30th, 2013

2. FREEMAN WEBB COMPANIES
 Founded in 1979 with one multifamily property and 1 employee
 Currently Freeman Webb has over 450 employees and
owns/manages a long-term portfolio of income producing properties
comprised of 16,000 apartment units under ownership/management
as well as 1,000,000 sf of office and retail space
 Annual Rent Collections of $100 Million
 Properties owned are primarily in Tennessee, but previously the
company owned multifamily properties in
Alabama, Indiana, Ohio, Missouri, Mississippi and Texas
 Freeman Webb Companies is comprised of the following divisions:
 Acquisitions & Investments
 Property Management
 Construction Services
 Mortgage Services
 Residential Real Estate Brokerage

3. FREEMAN WEBB:
Acquisitions & Investments
 Focuses on the acquisition of multifamily properties for our
investor clients
 Historically have acquired 1970’s and 1980’s vintage assets
 Perform large-scale rehabs, reposition and stabilize assets for
long-term holds
 Through asset management, Freeman Webb looks to
maximize investor yields by many methods including
reduction of individual property operations, namely reducing
property operating expenses
 Business strategy has helped the company to grow by 50% in
the last three years

4. FREEMAN WEBB:
Property Management
 Management company provides property management
services for Freeman Webb-owned multifamily and
commercial properties
 Also provides property management services for clients;
has roughly 6,600 apartment units and over 500,000 sf
of commercial space in our management portfolio
 Named the 2010 National Property Management
Company of the Year by the National Association of
Home Builders

5. FREEMAN WEBB:
Construction Services
 Manages large-scale rehabs of new
acquisitions and/or current assets that are
looking to be repositioned
 Typically has over $20,000,000 worth of
rehab in process at any given time
 Based on rehab scope and property
needs, rehabs will include full interior and
exterior renovations

6. FREEMAN WEBB:
Construction Services
Whispering Oaks – Before Rehab

7. FREEMAN WEBB:
Construction Services
Whispering Oaks – After Rehab

8. Whispering Oaks – Before & After

9. Whispering Oaks – Before & After

10. FREEMAN WEBB:
Construction Services
 Interior Unit rehabs include cabinet replacement, counter
top replacement installation of new flooring, among other
items
 There are also a number of opportunities for installation
of energy efficient appliances, windows and doors
 Repositioning of properties through extensive interior &
exterior rehabs provides more quality housing
opportunities for individuals and families while also
extending the useful life of the asset

11. DEMAND FOR MULTIFAMILY
HOUSING
 Multifamily properties (5+ units) make up approximately
20% of the nation’s housing supply but that percentage
will increase
 Apartment demand is at an all-time high for several
reasons:
I. Demographics
II. Shift in Psychology
III. Declining Homeownership Rates
IV. Difficulty in Getting a Mortgage
V. Pent-up Renter Demand

12. M U LT I F A M I LY
D E M A N D
I. DEMOGRAPHICS
Number of People Turning 30 Years Old vs. Homeownership
Rate

13. M U LT I F A M I LY
D E M A N D
II. A SHIFT IN PSYCHOLOGY
 Young peoples’ attitudes towards homeownership have
changed
 One reason is they are seeing people trapped by
“underwater” mortgages and millions of foreclosures
 They believe that a home is no longer the biggest
investment of a person’s life, but rather that they can
rent and still live how they want
 They are free to pick up and move if they get a job
opportunity in another city
Source: “Renter Nation”, Gene Epstein, Barron’s Magazine

14. M U LT I F A M I LY
D E M A N D
III. DECLINING HOMEOWNERSHIP
RATES
 The homeownership rate has fallen to 65% from its peak of 69% in 2004
 It is likely to fall below 64% by 2015, if not sooner
 Conversely, it is anticipated that the national rental rate will rise to 36% by
2015
 Every percentage point increase in the rental rate = 1.3 million households
joining the renter pool
 Average household size is greater than two people, so analysts estimate
10 million extra renters could be moving into the market over the next five
years
 Apartment supply being delivered is, in most estimates, less than half of
what is necessary to meet the expected demand (Marcus & Millichap, 2012
Apartment Outlook)
Source: “Renter Nation”, Gene Epstein, Barron’s Magazine

15. M U LT I F A M I LY
D E M A N D
III. DECLINING HOMEOWNERSHIP RATES
(continued)

16. M U LT I F A M I LY
D E M A N D
IV. LESS LIKELY TO PURCHASE A HOME
 First-time home buyers (the bulk of which are under 35 years of
age) now account for roughly 30% of home sales, down from as
high as 50% in 2009
 The question becomes “how many renters can actually qualify for a
mortgage?”
 Many in this generation have gone back to school for more
education and have taken on large student debt obligations
 Stricter mortgage underwriting standards, which were much
needed, are also making it more difficult for many in the younger
generation to qualify for a mortgage

17. M U LT I F A M I LY
D E M A N D
V. A GENERATION LIVING AT HOME
%
%
%
%
Source: “The Boomerang Generation:
Feeling OK about Living with Mom and
Dad”, Pew Research Center Report
(March 15, 2012
Put into
Perspective: the
highest the young
adult rate has ever
been was in the
1940’s when it was
27.7%. At its low
point in the
1980’s, this rate
was right at 11%.

18. MULTIFAMILY DEMAND LEADS
TO DEMAND FOR ENERGY
EFFICIENCY Freeman Webb and firms like it are examples of multifamily
investors who are looking to retrofit properties with energy
efficient technologies
 Multifamily investors are hoping for want to utilize and implement
public and/or private programs that will provide assistance in that
effort
 Other programs, such as Low-Income Housing Tax Credit
programs, can provide equity to incorporate energy efficiency in
property rehabs
 Demand for multifamily units is at record levels, so the need for
these programs is greater than ever before
 In the wake of the Great Recession, apartment renters are much
more price-sensitive than ever and more mindful of their monthly
expenses
 Younger generations are more mindful of the environment in
general and desire to see energy efficiency and eco-friendly
properties

19. BUSINESS STRATEGY:
Combating Implementation Challenges
 Ignorance of available programs and how to access/implement them
on the part of owners: educational events like today are essential
 Some programs, like those that offer energy tax credits, are difficult
to qualify for or are cost-prohibitive
 Owner’s need convincing of the merit of spending money on energy
efficient upgrades as opposed to other property upgrades or general
maintenance
 Problem of Renter Perspective:
 utility reductions are not yet realized by prospective renter
which makes it difficult to use as sales tool
 Prospective renter’s are largely drawn by property condition
(curb appeal), property amenities (pool, playground, etc.), and
condition of unit
 Owner’s reluctant to make upgrades where returns may not
be realized for years to come

20. BUSINESS STRATEGY:
Conclusion
 Demand for multifamily units is at an all-time high
 Multifamily owners currently have opportunities to incorporate
energy efficiency into their properties for new development
but also in property rehabs
 Energy efficiency can reduce operating costs for properties
which typically lead to higher property cash flows and higher
investor yields
 Data shows that the economic benefit for energy efficiency
can be substantially and it can be attained with the help of
existing programs
 Energy efficiency can be an effective marketing tool with
respect to the leasing of multifamily units
 Energy efficiency, aside from being the right thing to do, is
simply good business