Analysis of Investments

Fritz Farm

PASSCO

This development is in Lexington, KY. It’s a Class A mixed-use complex with 306 multifamily units, restaurant and retail space, and office units. Multifamily tenants will have access to amenities that include a fitness center, a heated pool, a package room, bike storage, grills, a clubhouse, and a dog wash center.

Investment Highlights

  • Yr. 1 Cash-on-Cash 5.00%
  • Initial Occupancy 86.60%
  • Est. Time Horizon None YEARS
  • Current Cash Flow 5.00%
  • Yr. 1 Cap Rate to Investor 4.89%
  • Investor Purchase Price $71,817,000
  • Total Offering Size $37,475,000

Loan Information

The loan has a fixed interest rate with interest-only payments for the first five years and amortization payments set on a 30-year schedule. Potential for penalty fees are a yield maintenance for prepayment (no penalty if prepayment is made within 3 months of loan maturity) and a 1% cost of outstanding principal if the loan is assumed. The loan also has a cash sweep prevision. *LOAN DOCS ARE NOT FINAL*

  • Yr. 1 DSCR 2.39
  • Loan-to-Offering 47.82%
  • Hold Period DSCR 2.27

Tenant Information & Lease Terms

Apartment tenants are assigned leases that range between six and twenty-four months.

Key Positives

  • The sponsor has underwritten the offering with conservative projections.

  • The local population has healthy annual growth ( 1.98% within 1-mile, 1.02% within 3-miles, and 0.98% within 5-miles).

  • Moderate leverage (LTV 47.82%).

Key Risks to Consider

  • Low investor CAP rate.

  • Rents are 29% above the average market rent.

  • The Sponsor has aggressive projections for year-1: NOI +31.21% and EGR +20.90%.

  • Incomplete analysis: PCR, Loan docs, ESA and appraisals are missing.

  • Financing has not been finalized.

  • The Sponsor vacancy projection (5.4%) is much lower than what the submarket has experience in the last two years (10.175%).

Investment Sponsor Information

PASSCO

According to the sponsor's website: "Since 1998, Passco Companies, LLC has operated throughout all market conditions and cycles. The company has acquired over $4 billion in multifamily and commercial real estate in the United States. Since its inception, Passco Companies has become a recognized provider of investment opportunities in real estate projects.

Passco Companies is directed by a team of dedicated senior real estate professionals whose experience in the business averages 34 years, and who, collectively, have acquired over $30 billion in investment real estate projects."

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