Unique Multi-Family Real Estate Recapitalization: Attractive Risk-Adjusted Returns, Experienced Sponsor, Competitive Financing and Strong Fundamentals
RueOne is offering investors the ability to participate in a $6.5MM equity raise for the recapitalization of Barrington Place, a multifamily residence located in the University City area of Charlotte, NC. The Sponsor acquired Barrington Place in 2012 as part of a portfolio acquisition of financially distressed assets that represented quality real estate with an inefficient capital structure. The Sponsor is now able to retire the existing debt without prepayment penalty and fully recapitalize the asset with new debt and equity to execute value-add enhancements to the Property.
This opportunity presents a number of strong fundamentals that include:
· Strong market dynamics – The Charlotte MSA experienced robust population growth of nearly 3x the US average from 2000-2015, and, per CoStar, this growth is expected to continue to outpace the national average at an annual rate of 2.4% through 2020 (vs. 0.8% in the US). CoStar also projects that employment growth will outpace the national average through 2020 thanks to activity in the Financial Services; Professional / Business Services; Retail Trade and Leisure / Hospitality sectors.
· Desirable Location – Barrington Place is located in the University City area, the second largest employment area in the Charlotte MSA. The Property offers easy access to UNC Charlotte and the University Research Park, and is close to nearly 4 million square feet of retail space along University City Boulevard. The location offers an easy commute to Uptown Charlotte, and, in 2017 a LYNX Blue Line rail station will open in the University City area 2.5 miles from the Property, further enhancing connectivity to the rest of the city.
· Strong Property Demand and Value-Add Potential –The Property has experienced strong and steady demand, with occupancy averaging 97% since 2012, and the Sponsor believes there is opportunity to optimize revenue via strategic upgrades. To that end, the Sponsor plans to invest approximately $3.7 million which includes approximately $2.0 million to enhance interiors and $1.7 million to improve building exteriors and property amenities. Upon completion, the upgrades are expected to generate an overall rent increase greater than $100 per unit per month while enabling the asset to remain competitively priced with its peer properties in the submarket.
· Conservative Capital Structure / Favorable Debt Terms – The interest rate of 3.78% fixed 7-year term, interest only, 61% loan amount vs. total cost. The Property benefits from the Sponsor locking in this financing at lower than current rates several days before the Presidential Elections.
I encourage investors interested in accessing additional information on Barrington Place to visit the RueOne platform at https://login.rueone.com. After a quick and easy registration process, investors can access summary material in addition to our deal room which contains our comprehensive due diligence write up and transaction specific documentation.