09/27/2018- TPCG prepares to go under contract on the purchase of Allendale Village Apartments
10/01/2018- TPCG is now under contract to purchase Allendale Village Apartments
10/03/2018 and 10/04/2018- TPCG completes physical and financial due diligence. The next steps are to work with CBRE and The Bancorp on closing procedures
Key Principal Selection Discussion
This is a 96-unit Class C property that is 97% occupied. It's located in a highly dense, blue collar part of Houston, TX.
Occupancy: Properties in this part of Houston generally observe 95%+ occupancy. Houston is experiencing solid population growth and Class C is generally recession proof. In a good economy, Class C occupancy is strong and maintains steady rates during economic troughs as people downgrade from Class B to Class C. Current owner is very unsophisticated in managing the operations, rehabbing units and optimizing revenue.
Business Plan: What makes this a great acquisition is that rents can be increased by executing a rehab plan similar to what we have done on our other properties. Given that TPCG understands this market well, the executional risk is greatly reduced. TPCG already owns multiple properties in this market and the same manager will manage this property as well. This will allow the salary, wages and office expense to be spread across those properties making our operational expense lower than what a solo owner would run it for. Expenses are not properly controlled. Three Pillars completed rehab on a similar properties near by and achieved above market rents setting a new trend for competing properties to follow. This property fits squarely in their area of expertise.
The business plan is to reposition the property to a Class C+ by performing extensive interior and exterior rehab, putting in a better tenant profile and increasing rents. TPCG has it's own construction crew that will perform all rehab. They also have their own maintenance team to perform repairs and maintenance. This alone will result in a lot of savings on the repairs and maintenance line item. Furthermore, the water bill can be lowered, as they did on their previous acquisition.
Allendale Village Apartments Due Diligence
Three Pillars team conducts inspection, due diligence and unit walk through
Important Videos About The Deal
NOTE: THIS PAGE IS ONLY INTENDED FOR KEY PRINCIPALS AND DOES NOT CONSTITUTE AN OFFER
Income Properties Portfolio
Players Involved in Deal
Mortgage Lender: CBRE
Lender: The Bancorp Bank (bridge) and then Freddie Mac
Terms: 3 years interest only with two 1-year options, 30 year amortization, Libor + 340 basis points
Construction Manager: Fernando Zamarripa, Three Pillars Capital Group
Property Management: Greenline Apartment Management
Introduction to Allendale Village Apartments
Josh Welch, Founder
Lucas Fertitta, Director of Acquisitions
A glimpse into a previous rehab project