Invest in Cooks Crossing Multifamily
Preferred equity investment in a 96% occupied multifamily property in the Cincinnati area with leases renewing at substantial premium.
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Cooks Crossing
What to Know
This well-located property has strong in place cash flow and the Sponsor plans to grow rents through $1.4M in capital expenditures focused on the property’s exterior and amenities. The seller recently completed a $2M interior unit renovation plan and leases are already renewing at a substantial premium (~14% to 23%).
The property will be co-Sponsored by Hudson Investing and Bailey Venture Partners. The two firm principals have over 20 years of real estate experience and have acquired over 15K units totaling $2B+ in real estate value over their careers. Additionally, they have significant experience with multifamily assets in the Midwest, with properties in Indiana, Kentucky, and Ohio.
Preferred Equity Offers Attractive Risk Mitigation
‣ Preferred equity investments like this one are entitled to repayment of principal before the Sponsor and equity investors receive repayment of principal. This provides a margin of safety in the event that the value of property were to stay flat or decline.
‣ Investors also have priority of payment on distributions from rental income and property operations.
‣ The Property is forecasted to provide NOI that is 1.1x the combined payments owed to the senior lender and EquityMultiple investors in year one (1.1x debt service coverage ratio). This is forecasted to grow to 1.3x by year three.
Rent Premiums are Already Being Achieved at the Property
‣ As of May 2022, property occupancy is 96% with an average in-place rent of $1,056/unit, a 29% discount to market rents at comparable properties offering the opportunity to raise rents to existing market rates. The Sponsor is targeting an average rent increase of $345 over three years.
‣ In 2020, the seller spent approximately $2M to fully renovate the unit interiors. Post renovation, the property is already achieving renewals of $1,200 to $1,300 per unit (~14% to ~23% higher than existing rents).
‣ The Sponsor plans to spend $1.4M on Property amenities, common area, and base building upgrades. Capital expenditures will include a new clubhouse, roof replacement, new signage, siding/ gutter replacements, a dog park and community BBQ grills to make the property comparative with comparable local properties.
Strong Demand for Multifamily is Expected to Continue
‣ The US faces a continued housing shortage that is not anticipated to alleviate in the near term, putting upward pressure on multifamily rental rates.
‣ Single family home prices have increased by more than 50% in the last five years, with double digit growth forecasted in 2022. Price growth in the home purchase market can shift demand to rentals, helping to support rental rate growth.
‣ Rental rates typically increase during periods of inflation, making multifamily properties an inflation hedge for investors.
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