Property Specs
GreenLite Holdings utilized its proven value-add techniques to identify and capitalize on an underperforming class C asset located in a stable, well-performing market. As a result of an aggressive and extensive reposition plan, the asset benefited from a significant increase in net operating income and maximizing property value over a brief, three year holding period.
Project Background
Initial Situation
The asset underwent its reposition over a period of 30 months. Shortly after acquisition, the operations were impacted by the effects of the COVID-19 pandemic. Additionally, the property experienced significant physical damage due to a rare storm event and the bankruptcy of its general contractor.
Strategic Execution of Enhancements
Despite these various challenges, the ownership team was able to still execute on its business plan. All exterior and common area improvements were completed within 6 months, while interior units were completed within 40 days of unit takeover.
Successful Disposition
At the time of disposition, new leases were achieving an average monthly effective rent premium of $358.
Opportunity
GreenLite understood the asset was receiving significantly lower rents than newly renovated properties within the submarket. Despite excellent location, the property was struggling due to outdated finishes, deferred maintenance and sub-optimal management. With the opportunity to acquire the asset at a low basis, the property was capable of benefiting from extensive capital improvements with minimal risk of over-improvement.
Extensive Capital and Operational Improvements
- Interior unit renovation across 328 units (+/- $20,000/unit)
- Interior scope included new ooring, cabinets, countertops, appliances, doors, plumbing/door hardware, lighting, window treatments, washer/dryer, paint, patio resurface, vanities, tub/shower resurface, 98 new hot water heaters and other improvements
- Extensive exterior and common area renovations (+/- $2,500,000)
- Exterior and common area scope included renovation of 2 pool areas, leasing ofce, clubhouse/gym, landscape, bbq area, playground, dog park, parking lot, 3 monument signs, roof replacement on 22 buildings, 2 tone paint, interior breezeways, 115 new HVAC units and all outstanding deferred maintenance
- Replaced on site management with new team experienced in repositioning
- Extensive marketing campaign to drive leasing trafc and expedite lease up
- Renegotiated service contracts and contested property taxes
- Increased effective rents over 62% from time of acquisition
- Increased net operating income over $860,000 from time of acquisition
Return on Investment
- Acquisition Price – $16,500,000 (Feb 2020)
- Disposition Price – $32,250,000 (Feb 2023)
- Total Return on Equity – 202%
- Equity IRR – 32.66%
- Equity Multiple – 3.02x
- 70% LTC (debt) + 15% LTC (preferred equity)
More On Our Investment Strategy
We take a defined strategic approach to each investment, focused on adding value in the right ways, in the right places at the right times.