Multifamily 2-8 Unit Market Update

This is Jonathan Aceves with an update on Multifamily Transactions in the 2-8 Unit Space for 2019.  Here’s the Spreadsheet: 4th Quarter Market Report.   

 

Overall, the market was steady in small multifamily for the year.   The average price per door was $58,256, with an average Gross Rent Multiplier of 7.56.  Anecdotally, we have seen overall interest in Downtown multifamily increase significantly.  

Downtown, we’re seeing rents increasing, and I think this is helping to drive investors to renovate buildings and put make new product available.  The 8-unit complex we sold on Fourth Street I don’t think would have sold two years ago, but rising rents made the property compelling for an investor willing to upgrade the units and reposition the property to students and young professionals.  

 

We reviewed 36 transactions from 2-8 Units, with an average of $58,256 per door, and an average GRM of 7.56.  Average price per foot was 64.07. We did find that GRM went down slightly over the year.  There was one outlier, and when removed the Average GRM was 7.77. 

 

We’ve shown Days on Market by this box and whisker graph, and it shows that 50% of all transactions closed betwen 50-150 days.  There were some transactions that closed over a much longer period, one over 300 days and one at over 700 days.  The overall average was 116 Days.  I think what this shows is that if priced correctly and adequately marketed a multifamily property should close within 4-5 months.  

 

My experience has been that if priced correctly, a multifamily property in this category should go under contract relatively quickly.  We tend to suggest pricing a property with a fair margin to an investor, using market financing assumptions.  Here’s a simple spreadsheet you can use to help think through a multifamily deal: Basic Multifamily Underwriting Worksheet.  

Thanks for reading!  What do you make of the numbers?  What’s your opinion of the market?  

 

 

 

155-Unit Downtown Opportunity Zone Apartment Project Moving Forward–Continued Growth Downtown

 

Artist Rendering of Millhouse Station
Artist Rendering of Millhouse Station

 

Downtown Augusta continues to announce new projects and developments! Developer Ivey Development announced Friday they had closed on the land for a new downtown apartment complex.  This new development is in the immediate vicinity of two other ongoing development projects on Telfair Street, and three blocks from the newly completed Georgia Cyber Center.  

 

Ivey Development, developer for the 155-Unit Apartment Complex at 11th and Fenwick in Downtown Augusta, announced on Friday December 6th that they had closed on he land and were moving forward with the project. McKnight Construction has been selected as the General Contractor.  The land was purchased by Ivey Development from Jeff and Joey Hadden, who also own Phoenix Printing across the street.    

 

1024 Telfair Street – Augusta Office Solutions

This project is 500 feet from Augusta Office Solutions’ new building at 1024 Telfair,and a block from the city’s new fire station at 928 Telfair Street.   RD Brown is the general contractor on 1024 Telfair Project, which appears to be moving along nicely. 

 

This is great news for the City of Augusta!  155 high-end apartments will help fill in the housing gap created by continuing downtown developments, and will continue to press demand for retail and office space in the Central Business District.  

 

Congrats to Beman Group and Ivey Homes on what looks to be an incredible project! McKnight Construction Company, Inc. will serve as the general contractor. Trotter-Jordan represented the seller.  

 

What is your opinion of the downtown momentum?  What do you think we will see in 2020?

 

Augusta Chronicle Article: https://www.augustachronicle.com/business/20191206/ivey-development-acquires-downtown-land-to-build-155-unit-apartment-community

 

MKnight Construction Website: https://www.mcknightconstructionco.com/#1

 

Ivey Development Website: https://www.iveyhomes.com/

 

Article about the new fire station: https://www.augustachronicle.com/news/20190109/new-fire-station-slated-for-telfair-street

 

Update from RD Brown on construction of Augusta Office Supplies’ Telfair Street Building: https://www.browntrusted.com/overview/awards-accolades/

132-Unit Student Multifamily Housing Development given Preliminary Approval

2715 N Davidson
Photo is of the 2715 N Davidson Apartment Development, another project that College Acres was involved with.  –Charlotte Business Journal

 

 

132-Unit Student Multifamily Housing Development on Druid Park Ave given preliminary approval. Myrtle Beach Developer College Acres has proposed to build a four-story #apartment development aimed at Paine & AU students. David Despain, the developer, has developed a number of similar properties, and was also involved in working with Coastal Carolina University for the development of the HTC Center in Conway, SC.

 

It is great to see developers take notice of what’s happening in Augusta. This looks like a great project and should have a big positive impact in that neighborhood!

 

Augusta Chronicle Article: https://www.augustachronicle.com/news/20191202/developer-proposes-student-housing-complex-on-druid-park-ave

 

Info on Charlotte Project: https://www.bizjournals.com/charlotte/blog/real_estate/2015/07/developers-planning-147-unit-apartment-complex-in.html

 

Info on Wilmington Project: https://www.starnewsonline.com/news/20190103/more-student-housing-proposed-near-uncw

Wilmington Project Approved in October: https://www.wect.com/2018/10/18/wilmington-planning-commission-approves-college-acres-townhome-development/

 

Horry City Council Minutes RE: Tiff Bonds for HTC Center:

https://www.horrycounty.org/Portals/0/Docs/council/archives/min04-0518.pdf

September 2019 Multifamily Update

There’s a lot of activity in Augusta’s Multifamily Market!  We’ve already reported that there are over 1500 apartments in development around Augusta, and Damon Cline published an article with even more projects and details two weeks ago.  Click here to download the Costar Multifamily Report, which has some great information about vacancy rates, rental rates, and the overall economy.  Below we’ve included listings from the MLS, Costar and Crexi if you’re looking to buy or want to keep up with the market.  Many of these properties trade off-market, so give us a call if you’re looking for off-market opportunities.  

 

Subscribe to our Multifamily Newsletter–click here! 

 

MLS Multifamily Search (Mostly Duplexes & Quads)

Augusta Market Multifamily Costar Listings

Georgia Costar Listings

South Carolina Costar Listings

North Carolina Costar Listings

Georgia CREXi Multifamily Inventory Export

SC CREXi Multifamily Inventory Export

NC CREXi Multifamily Inventory Export

 

Recent Notable Sales:

926 West Apartments, McKinley Inc. to McDowell Properties for 26.5M, $94.6K/Unit

Crane Creek Apartments, Southeastern Development to PASSCO Companies, $58.0M, $193K/Unit, 5.73% CAP

Ironwood Apartments, LIV Apartment Partners to Graycliff Capital Partners, $51.9M $185K/unit, 5.4% CAP

Metropolitan Augusta to Lexerd Capital – Sold Aug 26th, Terms not disclosed (and not yet public record)

 

What are your thoughts about the Multifamily Market?  Overheated?  Just getting started?  What activity are you seeing?  What do you think about rental rates?  We’d love to hear your comments! 

Downtown Augusta’s Luxury Apartment Boom

Downtown Augusta is experiencing a luxury housing boom.  Over 1500 luxury apartments have just been delivered, are under construction or in planning in and around Downtown Augusta:

    • Ironwood, Downtown North Augusta, 280 units Website
      • Ironwood apartments are adjacent to SRP Park–the Greenjacket’s stadium, with an upscale hotel and retail space, connected to Hammond’s Ferry subdivision. 
    • Residence at Riverwatch, Riverwatch Pkwy: 260 Units Website
      • These apartments were delivered in 2018, adjacent to the Costco Regional Shopping Center, and will walking distance to Topgolf.  
    • Beacon Station, Wrightsboro Rd: 220 Units  Website
      • These apartments are adjacent to the Medical College of Georgia, and a landmark as one of the first market rate apartment projects to be built in the Laney-Walker Neighborhood.  
    • King Mill, Broad Street: 250 Units
      • This is a luxury apartment complex that will be built in the King Mill utilizing historic tax credits and connected to the Augusta Cyberworks.  
    • Train Depot, Reynolds Street: 140 Units
      • The city of Augusta is partnering with BLOC Development to bring these units to market. 
    • Historic Cotton Warehouse, Wrightsboro Rd, 190 Units
      • Burt Development of Albany, GA, bought these in February of 2018.  
      • Plans for Historic Tax Credit development
    • Ivey Apartments, Fenwick Street, 165 Units
  • What do you think is driving the growth downtown?  Do you have any more details about any of these projects?   Have we forgotten any upcoming multifamily projects? What impact will 1500 luxury apartments have on Downtown Augusta?
  •  

Update: Damon Cline at the Chronicle published a great story that goes into more detail on this.  Link

  •  

3 Multifamily Deal Analysis Considerations

I hear a lot of questions regarding underwriting multifamily deals.  I underwrite a few deals a week and have made lots of mistakes, and thought I’d share some thoughts and a few excel models.

  • Basics: At a minimum, in my opinion, an analysis for small multifamily should include some general information, a rent roll, an operating statement, financing information, and outputs.  I generally like to have two year’s actuals and a pro-forma.  The pro forma is built from the rent rolls.
  • Simplicity: Also, I completely agree with Peter Lynch of A Simple Model–financial models should be as simple as possible.  I also don’t believe that you should use another person’s model–you need to build it yourself and understand it thoroughly.  I’ve seen waterfall models and syndication models that would take an average person weeks to link together.  A mistake or two in that scenario would mean disaster!
  • Cascading Models:  I think it’s generally a good idea to have a simple “napkin” model that can help you determine if a deal pencils in general.  If it works, run it through a slightly more complex spreadsheet.  If that works, get it under contract, get your due diligence documentation, then run it through a more sophisticated model–one that you can print out and present to a lender or potential partners.  This will save massive amounts of time underwriting deals that won’t work.
  • Below are links to a simple model I’ve put together, and more complex models from other websites and blogs.

Presley Realty Simple Spreadsheet

Enodo Spreadsheet

Vertex Spreadhseet

Nelson CPA Spreadsheet

A Simple Model Spreadsheet

What are things you’ve learned underwriting projects?  Do you have questions about financial modeling?  Do you have a great model you’d like to share with others?  

Augusta Crane Creek Apartments sold for $58 Million

Passco Companies announced its purchase of the 300-unit Crane Creek Apartments in Augusta, GA for $58,000,000.  According to Costar, this property traded off-market at a 5.73% Cap Rate with a 5% vacancy at time of sale.  The sale price equates to about $193,333 per unit.   

 

Passco plans to make a a number of improvements to the already luxurious property including LED lighting, Nest thermostats, and energy-efficient toilets and shower heads.  

Continue reading “Augusta Crane Creek Apartments sold for $58 Million”

Augusta Crane Creek Apartments sold for $58 Million

Passco Companies announced its purchase of the 300-unit Crane Creek Apartments in Augusta, GA for $58,000,000.  According to Costar, this property traded off-market at a 5.73% Cap Rate with a 5% vacancy at time of sale.  The sale price equates to about $193,333 per unit.   

 

Passco plans to make a a number of improvements to the already luxurious property including LED lighting, Nest thermostats, and energy-efficient toilets and shower heads.  

Continue reading “Augusta Crane Creek Apartments sold for $58 Million”