Property Specs
Despite strong demand in the area, the asset had fallen behind due to dated interiors, deferred maintenance, and operational inefficiencies.
Property Enhancements
A full-scale repositioning plan brought the property in line with market expectations and unlocked significant rent growth. The scope of improvements included deep interior unit renovations, extensive common area and exterior upgrades, and strategic operational overhauls to ensure long-term performance.
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.
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.