Case Study- Carling on Frankford
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Carling on Frankford
(Midwest Multifamily)
Prevail Alternative Assets is pleased to present Carling on Frankford – a multifamily acquisition opportunity located in Carrollton, TX. The asset is a traditional garden style multifamily property consisting of 274 units, originally constructed in 1983. The current owner of the asset is selling for near total equity loss, which provides an attractive “entry” position.
The project will utilize capital improvements on the property to bring rents up to market and position the asset to be an attractive target for strategic buyers. We anticipate a 36-month hold period on this project, with flexibility to shift strategy if needed
If you have any questions, please reach out to your advisor or contact Regan Smith at rsmith@prevailiws.com
Investor Return Summary*
- Class A – Total of $3,500,000
- $250,000 per share
- 9% preferred return
- 22% – 24% LP Net IRR Targeted
- Class B – Total of $2,500,000
- $100,000 per share
- 7.50% preferred return
- 20% – 22% LP Net IRR Targeted
Investment Snapshot
- Total Project Cost – $43,841,192
- Total Equity – $14,837,856
- Prevail Equity – $6,000,000 (40.4% of Total)
- Senior Loan – $29,003,337
- SOFR + 3.5% with potential to go lower if SOFR drops
- 66.2% Loan-to-Cost (LTC)
Property Information
- Current owner is operating below market. Vacancy on property has averaged 15% over the last 12 months and market vacancy within a 3-mile radius is roughly 6%. With a revamped marketing strategy and improved on-site operations, we have an opportunity to “raise” this asset to market and capitalize on its historic underperformance relative to the surrounding market.
- Our low-cost basis on entry versus replacement cost for a similar property is very attractive. Rough per-unit acquisition price on the property is $135k, while the per-unit cost of undertaking a new build on a similar property is $230k.
- The current owner of the asset had already renovated 45% of the property units as well as the clubhouse before being forced to sell.
- We project cash distributions to investors during the life of the project, including during construction, with the majority of return on the project realized on exit.
*These are all preliminary estimates, with no guarantee of performance, and involve risk.