Background & Strategy:
Village at Rice Hope apartment community is a class-A, 200-unit property, conveniently situated on GA Highway 21, just north of Interstate 95. The property was completed in 2008 and is currently 99% occupied. The previous owner was faced with a construction loan that was coming due and was unable to refinance the loan. The construction lender agreed to a discounted payoff, thus providing the opportunity to acquire the property at a significant discount to replacement cost.
Investment Highlights:
- The property was acquired at a price approximately 70% of replacement cost
- The property comes with additional land that can accommodate an additional 320 units. This land can be sold or developed to generate significant additional value.
- Property generates > 15% annual yield and purchase offers at a 20% premium to cost have been received within 12 months of acquisition.
Deal Summary:
Purchase Price: $13.5 million ($67.5k/unit) (June 2012)
Debt: $9.9 million (Freddie Mac)
Equity Partner: Alex Brown Real Estate