Track Record

CASE STUDY

Newark – Irvington, NJ

0 %
Annualized Rent Growth
0 %
Annualized Asset Appreciation
$ 0 MM
Equity Returned to Investors

Investment returned more than 100% of original equity investment via refinancing in less than two years.

case-study-map_newark-irvington

Overview
The portfolio includes 7 properties ranging from 26 to 262 units and includes 642 units in total plus two cell towers. The buildings offer ample parking and an attractive unit mix of more than two-thirds 1 and 2 bedroom apartments. All are located in densely populated mixed residential and commercial neighborhoods with easy access to NYC, Newark and other NJ employment centers via highways or transit. The properties are well located and in high demand from residents but needed significant management and physical improvements to increase their value post-acquisition.

Value-Add
Acquisition
We identified undervalued assets that were institutionally owned but poorly managed with significant deferred maintenance and heavy lift value-add that detracted from their marketability and value. There were no institutional suitors; we were well positioned against competition from only a few other buyers and negotiated a very favorable price despite in-place rents that were well below market.

Financial
We spent more than $3.5mm on capex. Approximately 2/3 was prioritized for energy efficiency projects and deferred/preventative maintenance to improve property perception and long-term cost structure. The remainder was largely spent on unit renovations of the properties with the most immediate and long-term upside. Through optimized turnover and renewal planning we generated significant rent increases from a combination of partial and full renovations. Additionally, we converted parking lot operation to one master lease to create a higher, predictable revenue stream and divert management resources to more productive tasks.

Operational
We intensively managed the property to optimize occupancy, collections and operating costs. Annual turnover was reduced to less than 20% from 40%+. Economic occupancy increased to 95%+ from approximately 85% and physical occupancy has stabilized around 97% versus 90% when we acquired the property.

Returns
Generated higher than forecasted annualized returns in a shorter than expected timeframe.

  • We refinanced the assets with new lenders at an implied valuation that delivered 41% appreciation in less than 2 years
  • This refinancing returned more than 100% of the original equity investment
  • The recent lender valuation is still far below replacement cost and the investment is projected to far exceed the 15% IRR underwritten

CASE STUDY

38 South Walnut, East Orange, NJ

0 %
Annualized NOI Growth
0 %
Annualized Asset Appreciation
$ 0 K
Equity Returned to Investors

Investors received a buyout for 100% of their capital invested plus profit via a recapitalization in less than two years.

case-study-map_38swalnut-03

Overview
The property is a 25 unit walkup apartment building located adjacent to I-280 and within an eight-minute walk of two train stations providing a 20-30 minute ride to New York Penn Station or a 5-10 minute ride to Broad Street Newark. The building has a great mix of large 1 and 2 bedroom apartments and, although it was fully occupied upon acquisition, significant deferred maintenance and improvements were planned post-closing.

Value-Add
Acquisition
We negotiated an attractive, far below replacement cost price of only ~$70/SF that provided significant cash on cash returns. Additionally, the asset was absentee owned and managed with many apartments offering substantially below market rents and opperational upside.  Lastly, our purchase price was below tax assessed value allowing us to win a tax appeal and unlock substantial cash flow and capatalized value.

Financial
We secured a $40,000 repair credit at closing to fund value-added deferred maintenance, capital improvements and renovations with leveraged dollars. We then optimized turnover and spent additional funds on gut and minor renovations depending on how much rental upside was available. Through proactive management we were able to increase the rent roll two times faster than was underwritten, increasing the buildings’s value by almost $400,000.

Operational
We intensively managed the property to optimize occupancy, collections and operating costs. Occupancy averaged 97% over the life of the investment and collections were approximately 99% of net potential rent in 2016. On the cost side, we made significant repairs/improvements to the sewer, boiler, roof electrical and apartment to minimize insurance, M&R and utility costs.

Returns
Generated higher than forecasted annualized returns in a shorter than expected timeframe.

  • Paid 100% of preferred returns on time
  • Paid excess distributions in six of eight quarters. In the two quarters they weren’t paid, excess funds were invested in renovations and improvements to maximize exit value.
  • In addition to quarterly returns, investors recieved a buyout for 100% of their capital invested plus profit via a recapitalization in less than two years.
  • OWP/OWM have retained ownership and management of the property.