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Completed Equity
Multifamily
Casa Anita
Phoenix, AZ
INVESTMENT STRATEGY
Value-Add
INVESTMENT TYPE
Equity
Add to Watchlist
100% funded
Offered By SB Real Estate Partners
15.8%* TARGET IRR 14.8%-16.8%
5.9%* TARGET AVG CASH ON CASH
1.68x* TARGET EQUITY MULTIPLE
Estimated Hold Period 4 Years
Estimated First Distribution 10/2020
Minimum Investment 25000
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Project Summary
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Explore this Project
Overview
Value-add acquisition of a 224-unit apartment community in Phoenix, AZ alongside a Phoenix-focused sponsor with over 1,000 units in the market.
Value-Add

SB Real Estate Partners has budgeted approximately $1.4 million of exterior and common area capex, along with $2.0 million of interior unit renovation capex in order to collectively drive the value-add execution and compete with surrounding properties within immediate proximity.

Partner

SB Real Estate Partners has a strong presence in the submarket with an overall focus on Class B workforce multifamily throughout Phoenix (over 1,000 units under ownership). 

 

Location

Casa Anita is located within the thriving West Valley submarket of Phoenix, which has become the industrial, storage, and logistics hub of the city. This pocket of Phoenix is projected to add 23,000 more households and 31,000 workers through 2024, which would represent 22% of the MSA's overall job growth through that time period (Source: Alteryx and Costar). 

Property At A Glance
Year Built 1986
# of Units 224
# of Buildings 18
Current Occupancy 95.6%
Parking Ratio 1.5 spaces per unit
Acquisition Price

$35,300,000

Investment Highlights
SB Real Estate Partners is under contract to purchase the Property for $157,589 per unit, which translates to $177/SF on relatively large floor plans (primarily 2x2s) or over a 20% discount to comparable trades in the submarket.
SB Real Estate Partners has budgeted $1,971,200 ($8,800 per unit) for interior unit renovations and $1,394,344 for exterior and common area improvements.
The exit strategy is to sell the Property in four years at an expected cap rate of 5.50%.
Management
Cumulative Distributions

SB Real Estate Partners

Founded in 2017, SB Real Estate Partners (“SBREP”) is a multifamily investment firm committed to acquiring and asset managing value add investments throughout the Western United States. With an extensive track record in the institutional multifamily space, SBREP consistently sources compelling investment opportunities with the goal of maximizing value and risk adjusted returns for their partners.

https://www.sbrep.com/
  • Srijin Bandyopadhyay
    Managing Principal
Srijin Bandyopadhyay
Managing Principal

Srijin Bandyopadhyay is the Managing Principal for SB Real Estate Partners. Prior to founding SBREP, Srijin was responsible for sourcing, diligencing and closing over $1.2 billion of multifamily acquisitions throughout the west coast for Greystar Real Estate Partners. Srijin holds an MBA from the UCLA Anderson School of Management and a Bachelor’s Degree from Washington University in St. Louis.  Srijin resides in Orange County, Southern California, with his wife and two children.

Track Record

Property City, State Asset Type Acq Date Units Purchase Price Sale Price/Est. Value
95 Burnett Renton, WA Multifamily 10/26/2018 106 $26,850,000 $40,000,000
Cordova Phoenix, AZ Multifamily 6/26/2019 320 $32,250,000 $51,100,000
Bridge Creek Vancouver, WA Multifamily 10/15/2019 270 $55,900,000 $75,000,000
Verona Court Phoenix, AZ Multifamily 8/7/2020 141 $20,000,000 $36,600,000
Casa Anita Phoenix, AZ Multifamily 12/9/2020 224 $35,300,000 $59,800,000
Val Vista Mesa, AZ Multifamily 1/1/2020 98 $15,400,000  
Seventeen805 Phoenix, AZ Multifamily 11/1/2020 138 $29,750,000  
ReNew 3030 Mesa, AZ Multifamily 8/31/2021 126 $24,300,000  
East 3434 Phoenix, AZ Multifamily 9/30/2021 128 $27,500,000  
ReNew Redlands Redlands, CA Multifamily 10/14/2021 124 $46,200,000  
The Russell Las Vegas, NV Multifamily 10/14/2021 241 $67,000,000  
St. Croix Las Vegas, NV Multifamily 12/16/2021 256 $73,100,000  
Bloom 24 Phoenix, AZ Multifamily 1/19/2022 114 $34,200,000  
Bridge Creek (recap) Vancouver, WA Multifamily 1/20/2022 270 $75,000,000  
Confidential** Phoenix, AZ Multifamily Pending 180 $58,100,000  

**Under contract and non-refundable

The above bios and track record were provided by SB Real Estate Partners and have not been independently verified by RealtyMogul.

Business Plan

SBREP's capex budget totals approximately $3.8 million or roughly $17,000/door to address interior and common area renovations, along with various deferred maintenance and asset preservation items. The interior scope totals $2.0 million across all 224 units ($8,800/door) and includes: installation of in-unit, stacked washers and dryers, vinyl flooring, a modern light-gray two-tone paint scheme, resurfacing counters and cabinets, and replacing dated appliances with a modern stainless steel package. Common area improvements total approximately $656,000 or $3,000/door and includes: a full landscaping budget to activate the arrival/entry and leasing path as well as the overall grounds of the property as they are currently stale, repurposing the basketball court into an expanded and modernized kids play/family gathering area, a modern exterior paint scheme to significantly improve the drive-by/curb appeal of the property, installation of a perimeter gating or fencing system to establish the property's boundary and security, new FF&E for both the leasing clubhouse and pool areas, new BBQ stations, along with modern exterior lighting.  Finally, the deferred maintenance and asset preservation budget of approximately $779,000 or $3,500/door includes: capex for HVAC unit replacements, parking lot asphalt and seal coating, boiler and plumbing system repairs and reserves, roofing maintenance, and hand rail and wrought iron repairs and reserves.

Below is a summary of the capital improvements budget:

Capital Improvements Budget Summary: 
Interior Renovations     Total $ Amount Per Unit
Roll Vinyl Flooring and/or Carpet   $179,200 $800
Faux Stainless Steel or Black Appliances   $336,000 $1,500
Resurfaced Counters     $112,000 $500
Two-Tone Paint       $156,800 $700
New Blinds       $56,000 $250
Lighting Fixtures       $112,000 $500
Hardware / Fixtures       $112,000 $500
New Baseboards       $56,000 $250
Washer/dryer Installation     $672,000 $3,000
Labor / Contingency (10%)     $179,200 $800
Total Interior Renovation Costs   $1,971,200 $8,800
             
Total Common Area Renovations   $655,953 $2,928
             
Total Deferred Maintenance & Asset Preservation Costs $778,463 $3,475
             
Contingency (5%)       $170,281 $760
Construction Management Fee (5%)     $178,795 $798
             
Grand Total       $3,754,692 $16,762

These amounts are subject to change at the discretion of the Real Estate Company.

 

Property
Property Details

SB Real Estate Partners (“SBREP”) is currently under contract to purchase Casa Anita Apartments for $35.3 million and is underwriting to investor level returns of 15.8% IRR / 1.7x equity multiple over a four-year hold, with average cash-on-cash returns of 5.9%. The seller is an out-of-state family that has owned the property for almost twenty years and has maintained a conservative leasing strategy. The unit mix consists primarily of 2x2 floor plans averaging 980 SF. SBREP currently owns Cordova Apartments, which is located one mile east of Casa Anita, and is leasing smaller 2x2 floor plans of equivalent condition/finishes at over $1,150/unit (more than $300 above Casa Anita).  As a result, there is an opportunity to substantially renovate, rebrand, and reposition the property in order to bring rents closer to surrounding comparable properties. 

In-Place/Stabilized Unit Mix:

Unit Type # of Units % of Total Average SF/Unit Avg Rent (In-Place) Avg Rent (Post-Reno) Post-Reno Rent per SF
1x1 72 32% 709 $779 $1,010 $1.42
2x2 152 68% 978 $864 $1,265 $1.29
Total/Averages 224 100% 892 $837 $1,183 $1.34

 

Comparables

Lease Comparables
  Del Mar Apartments Broadstone Desert Sky Sunpointe Apartments Ventana Palms  Cordova Apartments Morada West Marble Creek Averages Subject (Post-Reno Rents)
Year Built 2008 2007 1984 1989 1985 1998 1985 1994 1986
# of Units 144 288 152 160 320 428 244 248 224
Class B B C B C B B   B
                   
$/Unit (1x1) $1,115 $1,147 $1,038 $948 $857 $1,065 $953 $1,018 $1,010
SF (1x1) 819 SF 799 SF 649 SF 740 SF 625 SF 717 SF 720 SF 724 SF 709 SF
$/SF (1x1) $1.36 $1.44 $1.60 $1.28 $1.37 $1.49 $1.32 $1.41 $1.42
                   
$/Unit (2x2) $1,315 $1,462 $1,313 $1,226 $1,148 $1,265 $1,215 $1,278 $1,265
SF (2x2) 1,127 SF 1,118 SF 917 SF 950 SF 880 SF 952 SF 1,000 SF 992 SF 978 SF
$/SF (2x2)  $1.17 $1.31 $1.43 $1.29 $1.30 $1.33 $1.22 $1.29 $1.29
                   
Distance from subject 0.5 mi 0.8 mi 1.8 mi 1.8 mi 2.8 mi 3.2 mi 3.6 mi    
Sale Comparables
  Del Mar Apartments Sunpointe Apartments1 Cordova Apartments Averages Subject
Date Sold Feb 2020 Under LOI Oct 2020    
Year Built 2008 1984 1985 1992 1986
Class B C C   B
# of Units 144 152 320 205 224
Average Unit Size 1,073 SF 804 SF 709 SF 862 SF 892 SF
Sale Price $27,000,000 $26,600,000 $51,200,000 $34,933,333 $35,300,000
$/Unit $187,500 $175,000 $160,000 $174,167 $157,589
$/SF $185 $218 $215 $206 $177
Building Size 145,848 SF 122,232 SF 238,410 SF    
Distance from subject 0.5 mi 1.8 mi 2.8 mi    

Sale and lease comps were obtained from SB Real Estate Partners.

1 Reflects expected terms under LOI.

Location

Market Overview

Per CoStar, the Phoenix multifamily market has proved to be resilient since the onset of the COVID-19 pandemic. Before the pandemic, fundamentals were solid and supported by some of the nation’s strongest employment and household growth. Relatively low levels of single-family homebuilding and healthy demand have continued to keep vacancies tight. Employment has started to rise again following the reopening of the economy in mid-May. Historically, the Phoenix MSA has attracted people in search of affordable living and job opportunities. This trend is expected to accelerate due to work from home arrangements that will lure renters from pricey West Coast markets.

Despite robust population growth over the past several years, single-family development has not kept pace and pricing has soared. Multifamily developers have worked to make up for the lack of residential construction. Demand for apartments has withstood a wave of new supply over the past two years and has kept vacancies historically low. Tight vacancies have contributed to ample rent growth that has consistently ranked among the best in the nation over the past two years.

Submarket Overview

Per CoStar, the West Valley submarket has been among one of the most resilient locations within the Phoenix MSA since the onset of the pandemic. The West Valley area has weathered the storm relatively better than other areas in Phoenix due to its affordable rents, which are about 15% below the market average. Because of steady apartment demand throughout the pandemic, daily asking rent levels in the West Valley recovered much faster than other areas in Phoenix post-pandemic. Before the pandemic, developers were attempting to meet robust demand in the area, which was previously underserved.  From 2011-2017, apartment inventory had not grown, despite strong population growth during that period. Overall, the demand drivers that worked in favor of the submarket in the past are expected to continue to play out in the market once the effects of the virus fade.

The West Valley has achieved one of the best rent recoveries in the Phoenix market since the onset of the pandemic. By May, rents began to rise again, and they are now well above the March peak. The West Valley is one of the most affordable submarkets in Phoenix. Asking rents average approximately $1,050/month, which is about 15% below the market average. However, the submarket has also achieved the most significant rent gains in past quarters. Modest residential construction, coupled with a lack of affordable available inventory in the market, had granted property managers leverage to increase rents even in the pandemic environment. 

Photos
Financials
Sources & Uses

Total Capitalization
Sources of Funds Amount
Debt - Initial Proceeds $25,245,309
Debt - CapEx Proceeds $3,754,691
Equity $11,248,791
Total Sources of Funds $40,248,791
Uses of Funds Amount
Purchase Price $35,300,000
Acquisition Fee $244,667
Loan Fee $290,000
CapEx $3,754,691
Closing Costs(1) $534,433
Working Capital $125,000
Total Uses of Funds $40,248,791

Please note that the SB Real Estate Partners' equity contribution may consist of friends and family equity and equity from funds controlled by SB Real Estate Partners. Additionally, the numbers represented above can change prior to closing depending on final loan proceeds, property condition assessments, appraisals, final closing costs, and other lender-mandated expenses.

(1) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intented to be capitalized into the transaction at the discretion of the Manager.

Debt Assumptions

The terms of the bridge loan are as follows:

  • Estimated Proceeds: $29,000,000
  • Interest Rate (Floating): SOFR plus 4.00%
  • Term: 3 years
  • Interest Only: 3 years 
  • Extension Options: Two (2) one-year extension options

The expected terms of the senior loan refinance are as follows:

  • Estimated Proceeds: $31,200,000
  • Origination Date: December 2022
  • Estimated Rate (Floating): SOFR plus 3.00%
  • Term: 10 years
  • Interest Only: 5 years

There can be no assurance that a lender will provide debt on the rates and terms noted above, or at all. All rates and terms of the debt financing are subject to lender approval, including but not limited to possible increases in capital reserve requirements for funds to be held in a lender-controlled capital reserve account.

Distributions

SB Real Estate Group intends to make distributions from SBREP-Casa Anita Owner, LLC to SBREP-RealtyMogul Investors, LLC as follows:

  1. To the Members, pari passu, all excess operating cash flows to an 8.0% preferred return.
  2. 70.0% / 30.0% (70.0% to Members / 30.0% to Promote) of excess cash flow and appreciation thereafter.  

SBREP-Casa Anita Owner, LLC intends to make distributions to investors. Note that all distributions will occur after the payment of both company's liabilities (loan payments, operating expenses, and other fees as set forth in the LLC agreements, in addition to any member loans or returns due on member loan).

Distributions are expected to start in April 2021 and are projected to continue on a quarterly basis thereafter. These distributions are at the discretion of SB Real Estate Partners, who may decide to delay distributions for any reason, including maintenance or capital reserves.

CASH FLOW SUMMARY
  Year 1 Year 2 Year 3 Year 4
Effective Gross Revenue $2,427,115 $2,768,459 $3,213,88 $3,756,427
Total Operating Expenses $1,072,668 $1,109,846 $1,151,000 $1,196,043
Net Operating Income $1,354,447 $1,658,614 $2,062,881 $2,563,374
SBREP-RealtyMogul Investors, LLC (ASSUMING A $3 MILLION TOTAL INVESTMENT)
  Year 0 Year 1 Year 2 Year 3 Year 4
Investor-Level Cash Flows ($3,000,000) $27,369 $940,666 $6,062 $4,068,324
Net Earnings to Investor - Hypothetical $50,000 Investment ($50,000) $456 $15,678 $101 $67,805
Fees

Certain fees and compensation will be paid over the life of the transaction; please refer to SB Real Estate Partners' materials for details. The following fees and compensation will be paid(1)(2)(3):

One-Time Fees
Type of Fee Amount of Fee Received By Paid From Notes
Acquisition Fee $244,667 SB Real Estate Partners Capitalized Equity Contribution  
Construction Management Fee 5.0% of CapEx drawn to date SB Real Estate Partners Capitalized Equity Contribution  
  Recurring Fees
Type of Fee Amount of Fee Received By Paid From
Administrative Services Fee 1.0% of amount invested into SBREP-RealtyMogul Investors, LLC RM Admin(3) Distributable Cash
Asset Management Fee 1.0% of Effective Gross Income SB Real Estate Partners Distributable Cash

(1) Fees may be deferred to reduce impact to investor distributions

(2) RM Technologies operates the RealtyMogul platform. RM Technologies charges a fixed, non-percentage-based fee for real estate companies to use the marketplace. An estimate of this fee is included in the Closing Costs and is intented to be capitalized into the transaction at the discretion of the Manager.

(3) RM Admin will be providing the following services:(a) responding to inbound investor inquiries regarding how to subscribe to the Project, (b) distribution of all annual tax forms (after receipt of same from Project Sponsor), (c) processing distributions that are payable from SBREP-RealtyMogul Investors, LLC to Investors, however, RM Admin will not be deemed to have custody of client funds, (d) distribution of all quarterly reports (after receipt of same from Project Sponsor) and (e) summarizing sponsor information on property performance, responding to investor inquiries regarding sponsor performance information as well as the real estate market generally.

Disclaimers/FAQs
Disclaimers

The content on this detail page was provided by the Sponsor or an affiliate thereof. The Sponsor is under no obligation to update this detail page. None of the opinions expressed on this detail page are the opinions of RealtyMogul and they are not endorsed by RealtyMogul. Assumptions and projections included in this detail page are not reflective of the position of RealtyMogul or any other person or entity other than the Sponsor’s investment vehicle (“Investment Entity”) or its affiliates.

The preceding summary of principal terms of the offering is qualified in its entirety by reference to the more complete information about the offering contained in the offering documents, including, without limitation, the Private Placement Memorandum, Operating Agreement, Subscription Agreement and all exhibits and other documents attached thereto or referenced therein (collectively, the "Investment Documents"). This summary is not complete, and each prospective investor should carefully read all of the Investment Documents and any supplements thereto, copies of which are available by clicking the links above or upon request, before deciding whether to make an investment. In the event of an inconsistency between the preceding summary and the Investment Documents, investors should rely on the content of the Investment Documents.

There can be no assurance that the methodology used for calculating targeted IRR is appropriate or adequate. Target IRR is presented solely for the purpose of providing insight into the Investment Entity’s investment objectives, detailing its anticipated risk and reward characteristics and for establishing a benchmark for future evaluation of the Investment Entity’s performance. Targeted IRR is not a predictor, projection or guarantee of future performance. There can be no assurance that the Investment Entity’s targets will be met or that the Investment Entity will be successful in identifying and investing in investment opportunities that would allow the Investment Entity to meet these return parameters. Target returns should not be used as a primary basis for an investor’s decision to invest in the Investment Entity. Please see the applicable Investment Documents for disclosure relating to forward-looking statements.

All forward–looking statements attributable to the Sponsor or persons acting on its behalf apply only as of the date of the offering and are expressly qualified in their entirety by the cautionary statements included elsewhere in this summary and the Investment Documents. Any financial projections are preliminary and subject to change; the Sponsor undertakes no obligation to update or revise these forward–looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

The interests in the Investment Entity will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) in reliance upon exemptions contained in Rule 506(b) or 506(c) of Regulation D as promulgated under the Securities Act. In addition, the interests will not be registered under any state securities laws in reliance on exemptions from registration. Such interests are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable state and federal securities laws pursuant to registration or an available exemption.

All investing activities risk the loss of capital. There can be no assurance that investors will not suffer significant losses. No guarantee or representation is made that investment objectives of the Investment Entity will be achieved. You should not subscribe to purchase interests in the Investment Entity unless you can readily bear the consequences of such loss.

Interests in the Investment Entity are listed on the RealtyMogul Platform. RealtyMogul receives fees from the Sponsor or the Investment Entity partially based on the number of investors investing in such Investment Entity through the RealtyMogul Platform. This arrangement could create a conflict of interest between RealtyMogul and investors.

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