A fast-growing, relatively new player on the Cleveland commercial real estate scene, real estate investment firm Smartland LLC., is currently seeking investors for two funds: a $22 million fund to focuse on properties in Qualified Opportunity Zone areas of Cleveland and a $50 million fund that will acquire multifamily and light industrial properties in Northeast Ohio with potential expansion into other regional markets.
“Smartland is an integrated real estate private equity firm that combines property management, marketing, architecture design, construction, and investor relations under one roof,” says founder and CEO Vadim Kleyner. “We like ‘heavy-lifting’ projects where we can deploy our on-staff crews and apply our out-of-the-box thinking to add value for tenants and investors.”
The company’s roots go back to 2008, when tech entrepreneur Kleyner decided to create his own real estate investment vehicle and began buying houses in Cleveland and rehabbing them into rental properties. As the business grew, he built out construction and tenant management teams and began offering property management services to out-of-state property owners. By 2013, he had 700 properties.
In 2012, Kleyner formed Smartland. With the sale of $90 million AUM in residential properties in 2014, he began a pivot to multifamily. Today, Smartland’s $70 million in AUM is still mostly residential rental properties, and it still does three to four houses a week, but the focus is on growing its multifamily portfolio.
One good example of Smartland’s unique business model—and proof of concept for an Opportunity Zone project–is the 100-year-old Body Block Arcade Apartments. Located in an urban industrial neighborhood about 2.5 miles outside of downtown Cleveland, Smartland saw value where others did not. Following an extensive renovation, the 40-unit property is 96 percent occupied at rents that are double what was being charged before.
Another good example is Breakwater Tower Apartments, a 112-unit, seven-story property in an older neighborhood east of downtown along Lake Erie. After renovation and repositioning in 2017, rents have increased 36% and occupancy has risen to 93% from 88%, while expenses have decreased by 16% in less than a year.
The firm has a number of potential acquisitions for both funds under letter of intent or contract. They include several industrial and commercial buildings slated for conversion to multifamily, a 310-unit suburban multifamily property, and a 40-unit multifamily conversion project in downtown Cleveland with the possibility of a two-story restaurant and outdoor rooftop patio.
