Candor Investment Group, based in Lowell, Mass., found a value-add opportunity in its acquisition of an $18 million residential portfolio in Lewiston and Auburn that totals 217 units across 33 buildings.
“We like value-add multifamilies,” said Jonathan Bombaci, the firm’s founder, president and CEO.
Discount pricing
Bombaci founded Candor in 2019 after a decade working in corporate finance. From his first portfolio of 30 units at the time, the firm has acquired about 750 units across Maine, New Hampshire and Massachusetts.
The company also offers property management services and residential real estate brokerage services, facilitating transactions for 667 properties valued at $359 million. In addition to Lowell, Candor has offices elsewhere in Massachusetts plus New Hampshire and Maine, with 63 agents overall.
On the investment side, Candor seeks sellers who want to keep their portfolios intact, said Bombaci.
“Real estate is pretty expensive; the margins are kind of tight,” he said. “We find that when people are retiring or exiting, they want to protect their employees and what they built. So they don’t like piecemealing off their portfolio.”
The approach generally allows Candor to buy at a discount while providing an easier exit for the seller, he said.
Earlier deal
The 217-unit deal followed a previous Lewiston/Auburn acquisition. In 2023 and 2024 Candor bought 12 buildings totaling 50 to 60 units, 40 of them occupied. The buildings were in poor shape, he said.
“It was a race by us, the bank and the city to see who would take the properties first,” he said. “Every building had issues and violations.”
The company partnered with the municipalities and developed a network of contractors to correct the issues, he said.
“It should be a win/win,” he said. “We want to buy properties that need work. We get the benefit of the price and then we invest.”
Candor performed renovations and upgrades, then sold nine of the buildings, keeping three.
217-unit portfolio
“As we got to know the city, we got to see more that we liked,” he said. “So we were open to other opportunities in the area and came upon” the 217-unit portfolio.
Addresses in Lewiston include 78, 82 and 86 Howard St.; 89, 91-93, 116-118 and 172 Walnut St.; 141-143 and 166 Bartlett St.; 105-107 Shawmut St.; 15-17 Pleasant St.; and 260 Park St. In Auburn, addresses include 21-25 Spring St., 110-112 and 114-116 Howe St. and 107 Broad St.
The structures are in good shape structurally but had problems like degraded exteriors and interiors, safety and trash issues, and some tenants behind on rents, said Bombaci.
“Curb appeal” upgrades started with the exteriors, including siding and roofing, without displacing tenants.
“In the first three months, we assess where we can have the biggest impact,” he said. “We spend a lot of time cleaning up trash, making sure the buildings are safe.” Apartments are renovated as they become available and rents are increased by $50 to $100.
“Our goal isn’t to give $500 rent increases,” he said. “It’s to target problems and make it better.”
Just over $1 million has gone into improvements in the first eight months.
About 35% of the tenants receive rent subsidies, the rest pay market-rate. At the time of acquisition there was about 10% vacancy. Quite a few units have turned over since then, he said. Now there are about 17 vacant units.
“We’re in the process of filling them,” said Bombaci.
The portfolio was acquired off-market.
“We got to know the sellers through another transaction,” he said. “We started a conversation and let them know that if they were thinking about selling, we were interested in buying.”
Financing included a Bangor Savings Bank loan of about $14 million, about $2 million raised from outside investors and another $2 million from internal Candor investors.
“Everyone on our team is an investor,” said Bombaci. “I learned early on that makes us unique.”
