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January Lane Townhomes

HomeWood Lane and Calendar Court, Grand Prairie, Texas 75050

 
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Property Location:
Grand Prairie, Texas


 

Amount Seeking

$5,000,000


Rate

1 Year: 7.0%

2 Year: 7.75%

3 Year: 9.0%

 

Asset Type

55 Townhomes


LTV

70%

 

Target Hold

3 - 5 Years


Lien Position

1st Position


Overview

 

Loan Amount

$5,000,000

 

Number of Units

55 Townhomes

 

Minimum Investment

$100,000


Resolute Commercial Capital (the “Sponsor”) is offering a $5.0MM equity membership investment for the refinancing of January Lane Townhomes LLC, controlled by the Sponsor, or an affiliate thereof (the “Target”), a tenant-in-common partial owner of the Property. The Target is a 55-unit (2-storey) townhome-style, Class-B multi-family apartment community in Grand Prairie, Texas.

The Target property’s 55 units are currently 94.5% occupied (53 units). It offers eight 3-bedroom units and 47 4-bedroom units with a larger-than-average market size of 1,706 square feet. Each unit comes with an attached garage, granite countertops, full-sized washer/dryer connections, 9-foot ceilings, and crown molding.

There are 22 additional units within the original 77-unit development that are independently owned and not part of this project. It is important to note that all 77 units are regulated by the same homeowners’ association (run by the Sponsor) to ensure the integrity of the neighborhood.

The Sponsor’s business plan is to continue to operate the property as a rental property for ten years while improving rents over a period of 3-5 years to add value. The Sponsor will replace the current management company with a new third-party property and marketing management firm as well as to conduct value-add renovations of units as needed to maintain a high level of occupancy and maximize the potential exit value.

The Sponsor/Fund Manager intends to exit the Investment through a sale of the 55-unit complex to an investment group at the end of the 10-year target hold period.

In-place rents at the Property are currently $1409 per month, 17% below market comparable of similar vintage and 38% below market comparables reflective of the contemplated renovations. The Sponsor intends to spend approximately $2.15M or $11K per unit on interior renovations including new stainless steel appliances, new kitchen countertops and cabinets, new flooring, new fixtures, and new paint. Additionally, the Sponsor is budgeting $880K or $4K per unit on exterior renovations, upgrading amenities and deferred maintenance that includes a new pool deck and club house, new outdoor kitchen, fitness center, dog park, and significant landscaping upgrades.

The conservative minimum sale price of $131,250 is 44% to 51% less than comparable single-family homes, which list between $235,000 and $264,900. The sale of one unit per month will allow the loan to be paid down at 124% of the loan amount every month. There are more than 1,500 active homes for sale in the area with an average listing time of 47 days on the market.

The Subject Property’s location in Grand Prairie, Texas, lies within the Arlington submarket of the Dallas-Fort Worth Metropolitan Area. Arlington is the 7th largest city in Texas with a population of nearly 400,000 and is the largest city in the state that is not a county seat. Major employers include Texas Health Resources (which employs more than 8,000 people) and the University of Texas at Arlington.

Situated nearly equally between the Dallas and Fort Worth Central Business Districts, the Target property is 12 miles from DFW Airport and is close to area attractions such as Six Flags, Globe Life Park in Arlington (home of the Texas Rangers ), and AT&T Stadium (formerly Cowboy’s Stadium).

The Target property is conveniently located less than a mile from both Interstate Highway 30 (a major east-west arterial which connects the cities of Fort Worth and Dallas) and President George Bush Turnpike. These interstates provide residents with complete accessibility throughout the metroplex.

The current occupancy rate in the submarket is 93.9%. Vacancies in Arlington have remained well below the submarket’s historical average despite supply-side pressure since early 2017. Sustained low vacancies combined with neighborhood-wide renovations of lower-priced homes have resulted in outstanding rent growth throughout the submarket. Rents in Arlington are about 40% above the pre-recession peak—one of the best marks in the metro area. As of February 2019, the market asking rent is $1,019 per month and the market effective rent is $1,007 per month, with an effective annual rent growth of 2.6%. The submarket is poised to continue to outperform due to strong demand for workforce housing and impressive job growth in the local industrial sector.

In terms of transactions, “value-add” is the name of the game and inventory turnover here is typically ranked at or near the top of Dallas-Fort Worth submarkets in terms of nominal units sold and percentage of inventory traded. With vacancies consistently below the metro average and a large renter base, Arlington gives investors an alternative to the more supply-heavy Northern Dallas submarkets.

Resolute Commercial Capital (RCC) offers this first opportunity on behalf of JLTH at North GP. Collectively, RCC’s senior executives have an acquisition track record of over $1.32B and nearly 8,900 units nationally. RCC is a real estate acquisition and asset management firm owned and managed by Resolute Capital Partners (RCP), a diversified alternatives private equity firm. RCP has deployed over $3B across various asset classes since inception in 2006.


Investment Synopsis

 
 
 

Financials

Resolute Commercial Capital plans to acquire 55 apartment rental units from the existing owners; and continue to operate them as rental property for a 10-year target holding period. The exit plan is first add value by making internal upgrades, then after 10- year period, sell all units to another Investor Group at the highest possible valuation attainable at that time. Here are the Investment Highlights:

A. EQUITY INVESTMENT REQUIRED $2,450,000

B. EXISTING DEBT TO BE ASSUMED $4,800,000

C. TOTAL PURCHASE PRICE TO BE PAID $7,250,000

The purchase price of $7.25 million is supported by a cash flow projection that has these key elements:

A. EFFECTIVE GROSS INCOME IN YEAR 1 OF $905,300

B. TOTAL EXPENSES IN YEAR 1 OF ($443,500)

C. NET OPERATING INCOME IN YEAR 1 of $461,900

The Year 1 Net Operating Income is expected to increase over time because:

A. ANNUAL RENTS WILL BE INCREASED AT A MINIMUM OF 3% per annum.

B. EXPENSES WILL BE CONTAINED TO GROW AT 2% per annum.

C. AND NOI WILL GROW FROM $461,900 IN 2020 TO AT LEAST $651,300 BY 2029.

This will enable the project to be sold at year end 2029 to another Investor Group for a price in excess of $9 million, assuming this new investor agrees to apply a conservative Capitalization Rate of 7.50% to the projected Net Operating Income of $651,300, estimated for 2030, at this time.

Here are three separate tables that present an Executive Summary of the Investment Attributes of acquiring, maintaining and selling this apartment complex over time.

 

Key Loan Terms and Value Summary

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Underwriting

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Property Description

January Lane Townhomes offers 8 three-bedroom units and 47 four-bedroom units with an average size of 1,706 square feet. Each Unit comes with an attached garage, granite countertops, full size washer/dryer connections, 9 foot ceilings and crown molding.

 

Unit amenities

  • Central Air

  • Granite Countertops

  • Counter Molding

  • Tile Floors

  • Washer/Dryer Connections

  • Tub/Shower

  • Fully equipped Kitchens & Stove

 
  • Tops & Microwaves

  • 9-foot ceilings

  • Energy Efficient Appliances

  • Stainless Steel Sink with Disposal

  • Unit intrusion Alarms

  • Oversize Garages Available

 
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Market Overview

 

The Subject Property is located in Grand Prairie, Texas, 1 mile south of Interstate 30 and 1/2 mile west of President George Bush Turnpike.

Strategically located between Dallas and Fort Worth, January Lane Townhomes affords residents convenient and easy access to DFW airport, employers, and shopping and entertainment opportunities throughout the DFW area.

January Lane Townhomes is located on the corner of January Lane and Duncan Perry Road—a crossing which sees an average of 5,000 cars per day. President Bush Turnpike sees a daily average of more than 50,000 cars, and the heavily trafficked Interstate 30 sees an average of 130,000 cars every day.

Regional Map

Regional Map

Arlington : Family Submarket

The Subject Property is located in the Arlington submarket within the Dallas-Fort Worth Metropolitan Area. Similar to other submarkets in the Mid-Cities of Dallas-Fort Worth, Arlington has performed well over the past few years. A lack of development early in the cycle, coupled with demand for relatively inexpensive apartments, helped drive vacancies to all-time lows.

While vacancies have trended upward in recent quarters (due to an increase in supply), rent growth has remained better than the metro average, partially due to renovations on older assets. Mixed-use developments like Texas Live! and 101 Center are aiming to increase the desirability of the area.

In terms of transactions, value-add is the name of the game and inventory turnover here is typically ranked at or near the top of Dallas-Fort Worth submarkets in terms of nominal units sold and percentage of inventory traded. With vacancies consistently below the metro average and a large renter base from which to draw, Arlington gives investors an alternative to the more supply-heavy Northern Dallas submarkets.

Vacancy:
Vacancies in Arlington have remained well below the submarket’s historical average, despite supply-side pressure since the beginning of 2017. The submarket is poised to continue to outperform due to strong demand for workforce housing and impressive job growth in the local industrial sector. Furthermore, the most recent supply wave is petering out, so fundamentals should improve over the next few quarters. The current vacancy rate in the submarket is 6.1%.


Rent:
Sustained low vacancies, coupled with renovations of older, lower-quality properties, has led to outstanding rent growth throughout the Mid-Cities, including Arlington. Rents in Arlington are about 40% above the pre-recession peak—one of the best marks in the metro. While rent growth has slowed as of late, the Mid-Cities area is still seeing the strongest rent growth in the Metroplex, and Arlington is no exception. With very little supply underway, rent growth could be poised to rebound once again over the next few quarters. In the submarket, the market asking rent is $1,019 / month and the market effective rent is $1,007 / month.

 
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Location Map.

Location Map.

 
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Rent Comparables

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Property Gallery

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Risk Disclosures

ResoluteCapitalPartners.com is a website operated by Resolute Capital Partners, and by accessing this site and any pages thereof, you agree to be bound by the Terms of Use and Privacy Policy. Resolute Capital Partners does not give investment advice, endorsement, analysis or recommendations concerning any securities. The content contained on the website does not constitute an offer to sell, solicit or make an offer to buy an investment interest. Offers to sell, or the solicitation of offers to buy, any security can only be made through official offering documents, such as a subscription agreement and private placement memorandum (the “Documents”), and only to eligible investors in those jurisdictions where permitted by law. Before making an investment decision concerning any investment described herein, potential investors are advised to carefully review the Documents. Any investment overview found on Resolute's website is intended only as a preliminary summary of such investment. This summary does not purport to be complete and is qualified in its entirety by reference to the more detailed discussion contained in the actual text of the Documents.

Investments and projections and other forward-looking statements contained on the website (which are statements other than those of historical fact) are estimates only and not assurances of the future results of any investment. Moreover, neither the issuer nor any other person or entity assumes responsibility for the accuracy and completeness of forward-looking statements. No person or entity is under any duty to update any of the forward-looking statements to conform them to actual results. Potential investors are advised to consult with their tax, legal and financial advisors before making any investment.

Resolute Capital Partners is not a registered broker-dealer or investment advisor.  Resolute Capital Partners (Resolute) does not make investment recommendations and no communication, through this website or in any other medium should be construed as a recommendation for any security offered on or off this website. Investments involve significant risk, may lose value, and are not insured by the FDIC or by any other Federal Governmental Agency nor are they guaranteed by Resolute. Investors must be able to afford to lose their entire investment. Additionally, investment opportunities posted on this website are “private placements” of securities that are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. In the most sensible investment strategy, alternative investments should only be part of your overall investment portfolio.

Neither the SEC nor any state securities commission or regulatory authority approved, passed upon or endorsed the merits of any offering on the Resolute website.