20.18% IRR • 8.85% Cash-on-Cash • 1.97x Equity Multiple
Crescent Commons was sourced off-market through Trion’s relationships in the Fayetteville market. The Property represents an outstanding risk-adjusted investment opportunity to acquire a 2006 vintage multifamily community located in one of the best supply/demand markets in the US, which has been undermanaged with significant loss to lease, and notable upside through a comprehensive value add program.
Untrended, unleveraged, stabilized return on costs is 6.85%; a significant increase to typical publicly marketed deals. The price per unit is $121,528; significantly lower than recent sales for similar assets. The projected property-level IRR is 25.17% and the average cash on cash during the hold period is forecasted at 8.85%. We were able to source this opportunity through aggressive terms and reputation for performing as a buyer.
In the Fayetteville market, there are only 214 units under construction or planned in the pipeline. Meanwhile, the population of Fayetteville continues to grow at above-average pace with existing assets operating occupancy in the mid to upper 90 percentile. Existing properties have been achieving as high as 20% rent increases on turnover of units. In addition, the military presence means a majority of the population can afford (via the off-base housing allowance) premiums for renovated units. However, very few renovated units exist due to long-term local ownership who is either unwilling or unable to invest in a renovation plan. The value-add asset management plan includes renovating all interior units, increasing the size of the gym, enhancing the pool furniture, and creating a more noticeable and appealing entrance and signage.
Trion will also investigate options on the vacant land parcel including self-storage (for residents) and an additional building; primarily of 1-bedrooms which rent at a premium in the market.
Built in two phases (2002 & 2006), Crescent Commons is a garden-style 3-story, 288-unit property consisting of 14 buildings. Amenities include a clubhouse, pool, gym, two dog parks, 32 private garages, and a full car wash building. In addition to the existing improvements, included in the purchase is a vacant land parcel totaling over forty-two acres which can be improved with additional units or a small storage facility that is consistently in high demand in the market.
Surrounded by the region’s prominent thoroughfares residents of the Property enjoy convenient access to the prime retail and dining, as well as the largest employers in the city including Fort Bragg. The property offers investors the opportunity to invest in a strong performing asset showing impressive operational momentum through 2020 and into 2021. The asset is primed for a value-add program to capitalize on market rental headroom in a highly stable market that ranked #1 in annual effective rent growth in 4Q20 out of 150 ranked markets.
No. of Units 288
Acquisition Date September 9. 2021
Hold Period 4 years
Levered IRR 20.18% IRR 8.85% cash-on-cash 1.97x equity multiple
Project Level IRR 25.27