Analysis of Investments

Lakeside at Arbor Place

ExchangeRight

This offering from ExchangeRight contains a single Class-B multifamily complex in Douglasville, Georgia.  The sponsor intends to finish previous upgrades from 2008 and look to increase rents from these unit upgrades. 

Investment Highlights

  • Yr. 1 Cash-on-Cash 6.20%
  • Initial Occupancy 95.50%
  • Est. Time Horizon 10 years YEARS
  • Current Cash Flow 6.91%
  • Yr. 1 Cap Rate to Investor 5.62%
  • Investor Purchase Price $28,300,000
  • Total Offering Size $14,300,000

Loan Information

The offering is using non-recourse debt with a 10-year term, interest only for the full term, 30-year amortization, and fixed interest of 4.00%. Cash sweep provision exists based on a DSCR trigger event where the DSCR drops below 1.70. If this occurs the lender can sweep all excess cash flow until DSCR increases above this level.

  • Yr. 1 DSCR 2.58
  • Loan-to-Offering 49.47%
  • Hold Period DSCR 3.03

Tenant Information & Lease Terms

N/A

Key Positives

  • This offering has strong debt service coverage, with an average 3.03 DSCR for the hold period.

  • Very low new competition expected in the submarket.

  • Conservative underwriting with OpEx projected to grow above top line rent growth and economic occupancy at 89% for the hold period. 

Key Risks to Consider

  • Heavy competition in the Atlanta MSA with 13,000 new units expected in the next two years.

  • Loan is interest only for the whole term.  No principal pay down will leave the full balance needed to be overcome on sale for investors to receive any return of capital and/or gain.

  • The property was originally constructed in 1988.  Older properties require more maintenance.  Sponsor is planning on upgrade to the property and has set aside $2.6M in reserves for renovations and PCR recommended long term repairs.  

Investment Sponsor Information

ExchangeRight

According to the sponsor's website: "ExchangeRight Real Estate, founded in 2012, is a private real estate investment firm focused on the acquisition and management of single-tenant properties throughout the United States. With over $1.2 billion in assets under management diversified across 425 properties in 28 states, we focus on investment-grade, necessity-based retail and Class B/B+ value-added multifamily.

We believe that investors deserve an investment strategy that provides them with stable cash flow, capital preservation, and value-added return potential in the face of uncertain economic and financial conditions. We have implemented a strategy designed to directly address this so that we can preserve our investors' capital and provide attractive income on their capital until the timing is right to execute a strategic exit to maximize their returns."

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