All Forum Posts by: Ben Leybovich

Anne, at the risk of breaking protocol, in which case the mods will pull this down, I'll invite you to reach out to me. We'd be happy to share references. We work with accredited investors only.

Thanks and good luck!

@Gerardo Waisbaum If you are aiming to implement more or less institutional management, which your lender may require you to do, it will consist of 3%-5% management fee that covers the back office and profit for the PM, and payroll for the on-site people. You will cover the cost of both, even though your on-site people will be employees of the PM. Thus, the question becomes whether or not your 52-unit property can support said payroll.

Continuing in the same vein of institutional management, the property really should have at least 2 employees, the manager in the office, and the maintenance tech. In today's economic environment let's just say that two full-time people, including overhead, will run you no less than $250,000 per year. Can the 52-unit handle this load?

If not, you could look at downsizing the payroll to part-time, implementing an altogether different structure of some sort, or even manage it yourself in Buildium or another software, but the question is how sustainable this is. This is for you to figure out, but you absolutely must peg your management approach prior to getting into the property.

It's hard to see how a building this size can be managed without on-site presence. I would say, yes. However, the better question is whether the building can absorb the cost. The issue with anything much less than 100 units is that while you really should have management and maintenance on-site, it's hard to pencil this payroll. This requires you to operate on a "square peg in round hole" principle, and cut corners to create a hybrid, but this is never sustainable. 

While smaller buildings are managed by ownership, and larger buildings are managed institutionally, this size is sort of a no-man's land.

@Darren Sager - You've known me for a decade. If I told you that I'll behave myself, would you believe it...?

 Thank you, Sir!

I am excited to announce the sale of Haven on Thomas. This property was a classic example of value add. Posting it here hoping to offer some perspective to you guys.

WhiteHaven purchased the property in February of 2021. This is a 104-unit constructed in 1983, and the business plan was to re-position the asset by renovating it from top to bottom. The CapEx budget was $2.8M, or about $27,000 per unit, and involved complete gut renovations of 100% of the interiors and the office, as well as a total rethinking of the community areas and landscape.

The property operations were in total shambles at take-over, which most groups would consider a bad thing, but for WhiteHaven it was a plus. Between the skips and the evictions, the vacancy at the asset dipped down to 65% at the lowest point, with about $60,000 of vacancy loss. While this put a strain on the operations, we were able to execute unit interior renovations much faster than anticipated, which is always our ultimate goal. The Loss to Lease, which started out at over $39,000 came down to about $8,000 last month, and will be lower in the next financial reporting cycle.

A few months ago, when we realized that we’d be selling, it became necessary to renovate more than 30 units within 45-60 days. The last batch of units was pushed over to the management just a week ago. Great job by Franco, our construction coordinator, and WhiteHaven Construction guys!While occupancy last month was at 70% when we closed yesterday occupancy was up to 93%, with several more move-ins scheduled for the new owner. The MEB team on-site absolutely killed the lease-up.

So, as of the latest reporting from March, the stats were as follows:

Loss to Lease: $8,200

Vacancy Loss: $60,400

Effective Income: $96,800. But now the property is at 95% physical occupancy.

Once the new owner burns through the vacancy loss, their revenue should hit North of $150,000. They stepped into the buying process with us early because they knew that in another 60 days, once the property is 100% stabilized at the new operational level, the price would go up.

So, why did we sell if there were profits to be had? 

Because prior to hitting 18 months, each additional month costs extraordinarily significant IRR, and we knew we'd be able to move our investor's capital into another asset with more meat on the bone, which we are doing as we speak. So, everyone wins!

The final point, our underwriting had us hitting at the end of Y3. But, the property operations being in such miserable condition allowed us to gain access to units much faster than planned, and to finish the project much faster.

Be careful as you can inadvertently cause reputational damage to yourself. There is no good way to both make a strong offer and provide a bunch of caveats for yourself, and by trying you risk being seen as an amateur who throws out lots of offers and nothing happens...

If you want to put a number on it, you have to be comfortable that this number sticks.

 Lol For what I paid for this, I could buy all of Lima, Wapak, and St. Marys :)

I am pleased to announce WhiteHaven Capital’s acquisition of Haven at P83 Apartments. This is our firm’s first transaction of 2022.

EXCELLENT LOCATION

An institutional-quality asset constructed in Peoria AZ in 2007, Haven at P83 is situated adjacent to one of the largest and rapidly developing entertainment and shopping districts in Phoenix, The Arrowhead Towne Center and P83. Haven at P83 is located within 4 miles from another community in the WhiteHaven portfolio, the Haven at Arrowhead. Both are minutes away from the in-coming TSMC campus.

UNIQUE DESIGN

Aside from the intrinsically superior location, several of the physical characteristics of the construction and design make Haven at P83 exceptionally unique. To start, the community consists 100% of townhomes, 163 in total, and all 163 units enjoy direct access to a private garage. Townhome layout in an apartment setting is rare in the Phoenix market and offers specific competitive advantages, more so within an urban setting. The same should be said of private access garages. While many higher-end communities feature detached garages, requiring tenants to walk a distance across the parking lot, attached garages with private indoor access is an extremely unique amenity.

The weighted average unit size is fairly large, exceeding 1,100 square feet, and the three-bedroom townhomes reach 1,500 square feet in size, making them feel more like small houses rather than apartments.

The community amenities currently include an office, state-of-the-art gym, resort-style pool, spa, grilling area, and a fantastic WiFi lounge.

STRATEGIC APPROACH

Haven at P83 is situated in an exceptionally good location. As we mentioned, the $35B development by the TSMC, which represents the largest direct investment in the history of the State of Arizona, is already under construction and is expected to bring in thousands of high-paying direct jobs into the area. For the incoming TSMC employees, this community, with its’ large two and three-bedroom townhomes and attached garages represents a uniquely attractive Class A residential option.

Furthermore, it seems that the City of Peoria is appealing directly to TSMC and the supporting high-tech industry with the Class A office infrastructure planned for the P83 district. Truly, in many ways, P83 is developing to be the ultimate live-work-play location for the TSMC and high-tech industry in Phoenix, competing with South Chandler and Intel.

That said, we’ve planned $5,000,000 of capital improvements that will bring this community in-line with the expectations of the anticipated tenant profile. Some of the proposed renovations are:

• - New cabinets
• - Quartz Countertops
• - Backsplashes
• - High-end appliance package
• - New flooring, paint, and fixtures
• - Electric car chargers in every garage
• - Smart home package
• - Community upgrades

We are anticipating these upgrades to result in a revenue increase of more than $650 per unit per month, from the current $1,644 to $2,304, and we expect the re-positioning to be completed by the end of 2024, or sooner.

FINAL THOUGHTS

WhiteHaven’s general approach to new acquisitions is most informed by our belief that prolonged success is a function of an unfair competitive advantage. This belief dictates what we buy and what we pass on, and serves as the foundation of our strategic approach to management.

Relative to Haven at P83, in particular, it is inherently unfair to other assets that Haven at P83 is located within one of the largest shopping and entertainment districts in all of Phoenix. After all, there are only so many units that can exist within proximity to such excellent infrastructure, and being in this spot certainly represents an unfair competitive advantage. Same can be said about townhome layouts, private access garages, and large unit sizes. All of these elements are scarce and unique, and represent pricing power and resiliency.

Relative to our capital improvements, we are not aware of any apartment communities in Phoenix that have electric car charging stations as part of every unit, as Haven at P83 will. Very few Class A communities include a smart home package with locks, thermostats, and garage door openers. Not to mention that our internal construction arm, Whitehaven Construction, will be installing absolute top-of-the-line kitchens, baths, and fixtures. Such improvements are uniquely attractive and represent a significant competitive advantage for the asset.

To sum up, while we are exceptionally bullish on continued growth within the Phoenix MSA, we are not taking any chances. WhiteHaven communities are all intrinsically competitive within their submarkets, and Haven at P83 is another glorious example!

We extend congratulations and gratitude to everyone involved, our partners, investors, and team. And, a special thank you to Brett Polachek and Chris Canter of Newmark Knight Frank Phoenix for facilitating this off-market acquisition for WhiteHaven Capital.

 Thanks for the call-out, Jay!

Happy to discuss.