At Scholar Properties we are continuously looking at opportunities to recapitalize and reposition our portfolios for maximum profitability. We go beyond what other asset managers provide by studying each property’s operating platform and market position to realize the full potential of the property and maximize the return for our investors.
In June 2014, Scholar Properties acquired 507-513 Quiet Place, a derelict and underperforming 26-unit townhome complex built in 1975 on 2.5 acres of land. Designated M12, the current zoning allows for a building height of up to 12 stories. The property was purchased for $2.35M ($90K/unit) with $88K NOI. At the time of purchase, the building was 43% occupied and required substantial capital improvements or redevelopment. The project required all existing leases terminated in advance of executing the planned $4.5m capital improvement project over a 24 month timeline. The scope included:
The project was completed in 16 months including 100% lease up and occupancy. The adjusted post-renovation cost of the project was $6.1M, generating $406,081 in NOI. The project was refinanced in 2016 providing for the return of 45% of each limited partners original capital contribution.
With cash flow stabilized and 3 years remaining on the mortgage term, the project enjoys consistent cash flow and the benefit of several exit options. The partners continue analysis of the merits to selling off each unit as condo-town homes versus holding the entire complex for cash flow in the long term, to be redeveloped for maximum density in the future.
|NOI – June 2014||$88,603|
|NOI – October 2015||$421,226|
|Cap Rate – June 2014||3.7%|
|Cap Rate – October 2015||6.9%|
|Distributions to Date||$750,000|
|% Original Equity Contribution||45%|