Granada Lakes Apartments
An increase in value of $2.6M within 8 months of ownership
Property Overview
Granada Lakes Apartments consists of 69 apartment homes, located on Rural Road, a major north-south thoroughfare in metropolitan Phoenix. This location offers close proximity to shopping, entertainment, and employment opportunities, as well as transportation linkages.
Residents at Granada Lakes enjoy a swimming pool; laundry facility; RV spaces; and tennis, volleyball, and basketball courts. Unit features include complete kitchens; walk-in closets; neutral color scheme; and storage.
as of march 2012
Strategy
The partnership acquired Granada Lakes Apartments in August 2011. The project was lender-owned, and listed by Cushman & Wakefield. We tendered an immediate, aggressive cash offer which was accepted by the bank. Our inspections and research into the prior ownership revealed that rents were $200 per unit per month below their 2009 levels.
An NAI Certified Appraisal report valued the building at a 6.75% CAP rate based on the PricewaterhouseCoopers National Investor Index. Our final purchase price was $2,287,500, making our stabilized unlevered yield 14.7% based on value, and 14.5% based on total cost. Using the appraised cap rate, the property would trade near $4.9mm, an increase in value of $2.6mm within 8 months of ownership.
This dramatic increase in revenues and moderate expenses is symbolic of our passion for asset management. We accomplished this lift in revenues with only five renovated apartments, thus leaving plenty of upside for the next buyer. We always have our eye on the exit strateg
Investment Summary
- Purchase Price: $2,287,500
- Closing Costs: $42,081
- Renovation: $25,000
- Total Basis: $2,354,581
- Annualized NOI @ Purchase: $216,000
- 2012 Annualized NOI: $337,000
- Appraised CAP Rate: 6.75%
- Appraised Value: $4,900,000 as of March 2012
- Potential Profit: $2.6mm
- Potential Multiple on Equity: 2.1
- Potential IRR: 100%
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