We’ve invested approximately $5.6 million in the renovation of the 23Hundred at Ridgeview apartments, an existing 480-unit apartment community in Plano, Texas (about 30 miles north of downtown Dallas).
Business plan
As of December 10, 2018, the property was roughly 95% occupied. Our partner, American Landmark Apartments, plans to use our investment alongside their equity and a senior loan, to complete interior renovations on all of the apartments and improve the community’s leasing center, gym and pool area.
With these improvements, the sponsor aims to increase net operating income (NOI) and consequently, the overall value of the property. We expect the sponsor to pay back our investment via a sale or refinance in approximately five years.
Why we invested
- Strong relationship with experienced partner: American Landmark Apartments (ALA) currently owns and operates over 23,000 units with a diverse real estate portfolio valued in excess of $2 billion. Prior to this acquisition, we have invested in seven other value-add projects with ALA, including The Enclave at Lake Ellenor in Orlando, which experienced a 39% appreciation in appraised value in just 21 months.
- Attractive margin of safety: Our investment, along with the senior loan, makes up roughly 72% of the value of the property. Since our position is senior to the sponsor, their equity provides a cushion against potential loss.
- Fast-growing area: The Bureau of Labor Statistics reported a 3.2% increase in employment between August 2017 and August 2018 for the Dallas-Fort Worth-Arlington MSA, nearly double the national average of 1.7%. With Toyota, Liberty Mutual, and JPMorgan Chase having recently expanded their operations in the area, we expect continued strong demand for reasonably-priced apartment housing.
