The JKAM team is excited to share our newest investment opportunity Tree Top Apartments, a 146 unit Multi-family Value Add opportunity located in Fayetteville, NC.
Participation in this project is being offered through the JKAM Diversified RE Fund II or as Direct Investment.
Key Investment Details
Avg. COC: 10.94% | Projected IRR: 20.96%
Equity Multiple: 1.9x | Projected Hold Period: 6 yrs | LTC: 65%
Why We Like The Deal:
Seller Appeal – This is the last remaining property in a 600-unit portfolio that the owner’s estate exited after 30 years of ownership. JKAM’s operating partner has already completed a successful transaction with them and we are confident in their approach for Treetop Apartments
Proven Property Management– Sweetwater Property Management has a proven track record and takes a more aggressive approach, which is an appealing characteristic for multifamily property management.
Return of Capital Year 3 – Refinance is planned after 2 years, which will allow for 100% of the investor capital to be returned, meaning the remaining 4 years will be pure cash flow and sharing in the profits.
Light Value Add – This property is a solid class B/B- and after careful consideration, the renovations aren’t going to include stainless steel appliances or subway tile backsplashes. A ‘lighter renovation’ approach is going to be taken, meaning less construction risks. There is value-add to capture in bringing the rents to market rate, which is something JKAM finds appealing.
Location – Fayetteville, NC is in demand, with strong rent growth of approximately 9% Year-over-Year, and higher demand than supply can meet.
Stabilized Occupancy – The property has maintained a steady 97% occupancy for 3 years. Our operating partner built-in a 15% vacancy rate, in case an increase in rental prices results in tenant turnover. Based on the local market, the demand should exist to replace vacancies.
Debt Terms: There is a 125 point spread between the fixed loan and the cap rate, meaning there is buffer in place and the property is cash-flowing without needing to immediately increase rents. This allows for a healthier balance when it comes to price increases and occupancy.
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