Houston Multifamily II Stock Offering on Yieldstreet
The crowdfunding investment platform yield street has put out an offer for a multi-family property in the Houston suburb of Spring, Texas.
Park45 Apartments is a six-building, three-story, Class A, garden-style living community 30 minutes north of downtown Houston. The property is equipped with amenities including a 24-hour fitness center, swimming pool with outdoor barbecue area, dog park, conference rooms, and a billiards room. The complex has 180 units in total, with 150 built in 2018 and 30 more in 2021.
The new owner, July Residential, bought the property in March for $34 million. The company is opening this $9.7 million equity offering to implement a value-added investment in the property that will earn investors an expected internal rate of return (IRR) of 14% to 16%. The property’s previous owners lowered rents during the pandemic to maintain high occupancy. The new investment program will aim to improve ownership by allowing rental rates to be increased to match market rents.
The capital expenditure program will focus on improving common areas and improving the interior of each unit. A total of $638,000 ($3,500 per unit) is allocated to the project. The current average rental rate is $1,208. July Residential projects there will increase the rate by an average of $120 per renovated unit.
Spring is located in the fifth largest metropolitan area in the country by population and housing is in high demand. Maintaining a high occupancy rate should therefore not be a problem for the new owners. July Residential projects forecast base rent growth of 4% in the first three years and 3% in each subsequent year.
Investors’ cash flows come from two streams of income: payments for rents received which are expected to begin in the fourth quarter of 2023 and from the appreciated value of the property when it is sold at the end of the expected holding period of five years.
- Minimum investment: $15,000
- Target IRR: 14% to 16%
- Target equity multiple: 1.8x-2x
- Target cash yield: 2% to 8%
- Target investment period: 5 years
July Residential specializes in multi-family assets in high growth markets that offer high potential for added value. The group is a subsidiary of El-Ad Group, a development company with over $2 billion in assets under management.
More recently, the group sold a property portfolio of 14,000 units for over $1.75 billion. Park45 Apartments marks its second offering through the Yieldstreet platform.
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