Analysis of Investments
BR Beach House
Bluerock Beach House is an investment into a Class A multifamily apartment complex located in Jacksonville, Florida. The property has a total of 228 units and has resort style amenities. The property is located in a favorable area with retail and businesses nearby.
- Yr. 1 Cash-on-Cash 5.75%
- Initial Occupancy 94.00%
- Est. Time Horizon None YEARS
- Current Cash Flow
- Yr. 1 Cap Rate to Investor 4.98%
- Investor Purchase Price $51,576,436
- Total Offering Size $21,344,436
The loan is for a total of $30,232,000 and is from KeyBank National Association under the Fannie Mae DUS program. The loan is for a term of 10 years, with the first 5 years being interest only. When amortizing the schedule is on a 30 year amortization. The interest rate is fixed at a rate of 3.91%.
- Yr. 1 DSCR 2.12
- Loan-to-Offering 58.62%
- Hold Period DSCR 2.06
Tenant Information & Lease Terms
Leases are signed on an individual basis at multifamily properties. The property manager will negotiate terms on a case by case basis. Leases are generally signed on a 12 month basis; however, this may differ for each tenant. Concessions are present in the local market and will be used to get tenants in the door.
The Debt Service Coverage Ratio on this property is over 2x which means that the cash flow from the property has the ability to pay the monthly loan 2 times over.
The local area does not have any developments currently under construction. This will limit the number of competing properties in the local area. The area that this property is located in seems to be infill.
Key Risks to Consider
The sponsor has projected their economic occupancy at 92.6% during the hold term, which does not allow for much cushion should there be an economic downturn.
The sponsor is also growing their Effective Gross Revenue at a rate above the projected Operating Expense growth.
The property is already occupied higher than stabilized values which limits the potential for growth in occupancy and value increase at the property.
The cap rate to investors is low (4.98%) and it is lower than comparable properties in the local market that average (5.17%).
The property is being purchased for a price of $220K per door which is higher than average investment cost
Investment Sponsor Information
According to the sponsor's website: "Bluerock is a national real estate investment firm headquartered in Manhattan with regional offices in Southfield, Michigan, Boise, Idaho and Newport Beach, California. Bluerock is a leading private equity real estate asset manager with a focus on Core-Plus, Value-Add, Opportunistic and Development investment strategies, and has transacted over 9 million square feet of residential and commercial real estate acquisitions since its inception in 2002. Bluerock's key principals have an average of 25 years investing experience, have been involved with acquiring over 30 million square feet of real estate with approximately $10 billion in value, and have helped launch leading real estate private and public company platforms."