Garden City Apartments - Value Add Investment - 40 Units

[Ben S.]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $2,000,000
Cash invested: $560,000

This 40 unit value add investment presented us with an opportunity to streamline management operations and increase below-market rents. Investment has been made to address deferred maintenance items with the objective of refinancing our acquisition loan with non-recourse agency debt once the value-add process is complete, returning a significant portion of LP capital to our investors.

What made you interested in investing in this type of deal?

We were made aware of this opportunity off-market and were able to negotiate a transaction to acquire the asset ahead of it coming to market.

How did you find this deal and how did you negotiate it?

We identified this asset through a trusted broker relationship.

How did you finance this deal?

We syndicated equity for this investment (25%) and procured debt financing (75%) for the balance of the cost. We were able to negotiate a 12 month interest only period with our lender to help facilitate the value-add process.

How did you add value to the deal?

- Increased below market rents.
- Reduced excessive operating expenses.
- Streamlined and property management processes.
- RUBS implementation.
- Addressed deferred maintenance.
- Implemented defined tenant selection criteria.

What was the outcome?

- NOI has increased significantly.
- Delinquencies have been reduced.
- Operating cost is ~15% lower than @ acquisition.