Azura Apartments
In fewer than three years, Jevan was able to turn this failing property around by reducing energy costs through renovations.
Property Overview
In October of 2015, Jevan purchased the 387 unit Timbertree apartment complex in Phoenix, AZ.
Timbertree was the quintessential workforce housing asset that Jevan looks for, an infill asset, located within the path of progress and major employment corridor.
Timbertee had been an institutional owned asset that began to show signs of neglect following the Great Recession, the previous owners were per pound buyers and when the asset began to suffer from deferred maintenance issues decided to put the property up for sale rather than address the problems.
Strategy
At the time of marketing, the underground chiller lines had corroded and were leaking throughout the property and the chillers had to use excessive power to make up for the leaking cold water from the lines. Jevan was ultimately awarded the deal based upon our experience with plumbing issues and we set to work to abandon the existing lines and replacing with new chillers lines. As of 4/18, we have reduced the utility expense by approx. $56,000 and created approx. $933,000 in value, assuming a 6% discount rate.
In addition to the addressing the deferred maintenance, Jevan instituted an interior renovation program to create brighter, cleaner, and more appealing interiors than the competing workforce housing assets in the submarket. Approximately a third of the units have been renovated with Jevan receiving on average a 37% return on our investment.
Based upon the strong performance of Azura and the overall macro conditions of the Phoenix marketplace, we decided to explore a possible sale of Azura. Despite having our business plan calling for at least a three year hold period, we received an offer and sold the property in July 2018 for of $37.8 million.
Investment Summary
- Replaced chiller lines reducing expenses by $56,000, creating $933,000 in value
- A third of the units have been renovated with an average of 37% return on investment
- Acquired asset in 2015 for $21.6M, sold in July 2018 for $37.8M
- In less than a three year period Jevan added a remarkable $16M or 75% in property value
- Project generated over $14 million in profit and an internal rate of return over 50%
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