In September 2019, Liquid Capital launched its offering for Avia Riverside Apartments, a 396-unit, garden-style apartment community located in the affluent Roswell submarket of Atlanta, GA.
Liquid Capital was able to secure the property at an attractive price due to an existing relationship with the seller and by posting a sizable non-refundable deposit. The property was poised for a significant upside opportunity and, as part of the business plan to reposition it, Liquid Capital planned to upgrade approximately 25% of all units in order to significantly increase net operating income (NOI).
Between the various interior and exterior upgrades, Liquid Capital anticipated it would achieve premiums of $125-$150 on the two and three-bedroom units, and $50-$75 on unrenovated units.
Over the targeted five-year hold, Liquid Capital planned to “prove out” the renovation strategy while still leaving a meaningful value proposition for the next buyer and selling it as a value-add property.
Upon acquisition, Liquid Capital quickly began executing the business plan. Within months, Liquid Capital replaced the majority of the property personnel, selected the first 20 units to be renovated, dramatically decreased the number of work orders inherited from the previous owner, and began the eviction process for tenants that did not meet the newly implemented tenant approval criteria.
By mid-2020, Liquid Capital had successfully rebranded the property as “Crest at Riverside” with new signage and landscaping, completed 14 unit renovations, achieved over a 50% lease renewal rate, and increased rents by approximately 3% despite the effects of COVID-19. Management also saw the opportunity to add an additional bedroom to several two-bedroom units, which was not originally underwritten, but further increased rent premiums.
Moving into Q4 2020, the property continued to perform and physical occupancy increased to 94%, with notable COVID-19 delinquencies being the only major concern. Nonetheless, premiums on renovated units were achieving between $160 - $500 due to new bedroom additions and lease renewals rose to 70% – higher than the market average. Given the property’s performance and the market’s robust appetite for Atlanta multifamily real estate, Liquid Capital decided to test the market for a potential sale.
Over the first two quarters of 2021, the property’s position continued to improve. Occupancy increased to nearly 95%, economic occupancy rose to 91%, the retention rate improved to 77%, and 5-8% rent increases were achieved on lease renewals. In Q3 2021, less than two years into the hold, Liquid Capital successfully executed a contract with a buyer for a price that exceeded the originally underwritten Year 5 exit valuation.
The sale transaction closed in early October 2021.
Favorable market conditions and a successful business plan execution created the opportunity for Liquid Capital to exit the investment earlier than planned and achieve favorable returns for investors.
*Net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual returns on a realized investment may differ.
This report contains explanations of a series of events associated with the Avia Riverside Apartments offering that resulted in an approximate 16.1% (net of most onerous fees) IRR to investors (including those from the CrowdStreet Marketplace). Certain aspects of the report such as dates of major events and the final outcome are easily verifiable while others, particularly underlying reasons behind the sponsor’s business plan execution, are not.
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