The Atlantic Cypress Creek is a premier 420-unit luxury apartment community completed in late 2018, in Fort Lauderdale, Florida. Through a relationship with the developer, we were able to secure an opportunity to provide an offer to purchase the community prior to the asset being marketed for sale, which is an unheard of competitive advantage in today's market. To secure the deal, $2,000,000 non-refundable earnest money was submitted with the offer with a 60 day close. The property was officially acquired late November 2019 and Holdfolio has secured an exclusive opportunity to raise $2,000,000 of a $33,000,000 raise. $31,000,000 has already been invested by a handful of other investors which include ultra high net worth individuals and family office investors.
Holdfolio is partnering with the Frankforter Group, a veteran sponsor who currently owns over 6,900 units across the southeast United States. Together, we will be investing $1,641,730 (5%) alongside investors.
Investors will receive an 8% preferred return and 80% of the operating cash flow and profit from the sale. The managers 20% share will only be paid once the property is sold and investors receive their preferred return and return of their invested capital.
Our plans to increase the value of this property over the short term:
- Increase occupancy from 89.2% to 95%. The developer has completed a large lease up in a short period of time, and does not have the unique operational experience to take leasing and management to the next level. We will employ Franklin Street as the property manager, who currently manages thousands of units owned by the sponsorship team, and work together to close the final gaps of providing an exceptional experience to residents and prospects.
- Raise rents by an average of $128 per unit over the first 24 months of ownership. The developer has offered the units for below market rates in order to help with the lease up from new construction. These additional rent premiums are well supported by the market comparables.
Why we love this investment:
- New construction with value add component
- Acquired property in a non-competitive environment through a relationship with the developer
- Built by Atlantic | Pacific Companies, one of Florida’s most experienced developers
- 8% preferred return with cash flow from day one
- Strong debt service coverage and break-even occupancy (see financials for more details)
- Long term debt, 10 year term, fixed at 3.81%, 69% loan to cost
- Ability to raise rents significantly with no improvements required
Unique details of this A-class multifamily investment:
- Current residents have over $110k average household income with an average rent to income ratio of only 20%
- Excellent long term debt yields strong cash flow and DSCR of 2.1+
- Current in place rents are 7% to 10% below market due to quick lease up by developer
- Break-even occupancy is ~70%