Consolidation Mode Completed & Record Prices Achieved

December 4, 2023

The Capital Stack

If you’ve been following along, you’re aware that 2023 marked the year of consolidation for us. In April, our thesis revolved around selling four properties that we initially intended to hold onto for many years. Upon evaluating our returns on equity, we decided an earlier-than-projected exit would allow us to realize gains, distribute profits to investors, and then patiently wait for the right time to strike on the next deal.

As 2023 wraps up, so does consolidation mode. We are pleased to report that we have sold three out of the four properties we intended to part ways with. Since June 2023, we have successfully sold Pinehurst Apartments, Hollyvillage, and Harvard Lofts. The fourth property originally part of the consolidation mode that did not find a buyer is Creekside at Fenton Heights. Out of all four properties on the chopping block, Creekside was the one we anticipated having the hardest time parting ways with. The property is on autopilot, and our main motivation to sell was to realize the value of the land. Creekside sits on 23 acres, and the current zoning allows for the development of 86 more units. We wrote a bit about the development opportunity here. Unfortunately, the debt market continues to tighten, which diminishes the value of the new development piece. Creekside is on fixed-rate debt at 4% and operates smoothly. It would be premature to sell the property without being able to realize the full value of the land. We are happy to hold onto it until development makes sense.

Pinehurst Apartments of Linden

We purchased Pinehurst in Feb of 2021 for $1.8m. We spent ~$200k on renovations and sold the property for $2.75m. In 2020 the gross income was $183k. In 2019 the gross income was $225k. Using our final 6 months of ownership, the annualized income was $335k. We were able to increase the income by 48% in 2019 and 83% in 2020 (using 2019 as a true comparison, we can’t take much credit for beating covid year income levels).

Final Net LP Returns (After fees & promote):

54% Total return

1.54 MOIC

22% IRR

Hollyvillage Apartments

We purchased Hollyvillage in November of 2021 for $975,000. We spent ~$150k on renovations and sold the property in July of 2023 for $1.6m. The NOI at the time we purchased the property was $74,175, in July of 2023 when we sold the property, we had increased the NOI to $108,635.

Final Net LP Returns (After Fees & Promote)

61% Total Return

MOIC: 1.61

IRR: 33.53%

Harvard Lofts

We purchased Harvard Lofts in January of 2022 for $825,000. We spent ~$425,000 on renovations and sold the property in November of 2023 for $1.725m. The whole process took 22 months. When we went under contract to buy this property, it was fully occupied with a monthly rent roll of $5,200. When we sold the property the rent roll totaled $15,600.

Final Net LP Returns (After fees & promote):

22% Total Return

MOIC: 1.22x

11.7% IRR


Pinehurst and Hollyvillage both set a record price per unit and a record price per SF in each of their submarkets. Harvard Lofts Consolidation mode allowed us to deliver excellent returns to our investors, build a track record, and demonstrate our ability to execute effectively despite deteriorating market conditions.

Now that we’ve sold those three properties, we are back aggressively on the buy side. None of our other properties make sense to sell, although they’re always for sale if a delusional offer comes up. We have gone back to looking at smaller properties, while the bread and butter continues to be 20-80 units. I’ve offered on 8 units; I’ve also offered on 140. We’re getting very close; it’s just a matter of time (and rates). Ideally, the bid-ask spread will close, allowing us to jump back into the mix of another classic value-add deal.

Major Market News

Kentwood (Grand Rapids) Apartment Complex Sold for $135M to California Buyer

A California firm recently acquired a 1980s-built 924-unit apartment complex southeast of Grand Rapids for $135 million in the still thriving West Michigan market.

Rents for the market-rate complex range from $1,115 for a one-bedroom, one-bathroom unit to $1,795 for a two-bedroom, two-bathroom apartment.

Read the full story here:

Tips and Tricks


Total Return: This is the total percentage return of the life of the investment.

MOIC: Multiple on invested capital. Same as total return but expressed in a decimal format.

IRR: indicates the annualized rate of return an investment is expected to generate over its holding period. IRR is much more sensitive to timing than Total Return & MOIC (They’re the same). For example, at Harvard Lofts, we projected an 18% IRR. However, we were unable to complete the project in time. Had we sold in April, we would have met that projection. Instead, we sold in November, and that 7 months of timing decreased the IRR from 18% to 12%, while delivering the same capital return to investors.


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