In late January 2018, Juniper Investment Group LTD (“Juniper”) launched their 400-unit, Class-B garden-style apartment community and adjacent 1.54 acre vacant lot located in south Oklahoma City, OK. At acquisition, the value-add property had 92.5% occupancy and was generating a net operating income (NOI) of $1.1M.
As the vacant lot accounted for only 2% of the total purchase price, the business plan was to secure long-term signage rights on the vacant lot and sell or contribute that land to a joint venture shortly after acquisition. On the main property, Juniper planned to maintain occupancy levels around 92%, leaving approximately 32 units available for renovations throughout the first three years of the planned ten-year hold. Planned renovations included interior and exterior upgrades, as well as expanding the amenity package. The exterior and amenity improvements were planned to be completed within the first year while interior upgrades were planned to take approximately three years.
First Year of Operations - Q4’2018
One year into the project all exterior renovations including, roof repairs, new gutters, new solar screens across all windows, new signage, significant concrete/driveway repairs, landscaping, and drainage improvements, as well as amenity upgrades, including a refresh of the fitness center, resurfacing of two swimming pools, and the addition of a dog park, had been completed as originally planned and were in-line with budget. Additionally, a total of 91 units had been successfully renovated with new appliances, fixtures, flooring, and paint.
February Fire - Q1’2020
In February of 2020, Drexel suffered a significant fire that destroyed one 16-unit building and affected two other buildings, including eight apartment units. Thankfully, there were no injuries from the fire and management was able to relocate most impacted residents into other apartments on-site.
Immediate Recovery - Q2’2020
During Q2 of 2020, Juniper quickly brought the eight units damaged by the fire back online, bringing occupancy up from 84% in the prior quarter to 88%. Excluding the 16 units destroyed by the fire, Drexel’s occupancy for the quarter totaled 96%. Adjusted NOI for the quarter increased 4% as a result of renovated rent premiums, a net decrease in expenses (primarily driven by lower fixed costs), and Juniper’s decision to temporarily eliminate some administrative fees during the peak of the COVID-19 Pandemic. Additionally, due to the minimal financial impact from COVID, Juniper decided the property did not need a Paycheck Protection Program (“PPP”) loan, and decided to return PPP funds previously received.
With the construction of building 13, which had been destroyed by the fire, rapidly approaching completion by the end of October, and hoping to take advantage of favorable market conditions, Juniper marketed the property for sale in July and August of 2021 and was able to quickly find a buyer. The contract was signed on September 24th, once the General Partner achieved the majority vote required to sell. The sale closed on December 21, 2021 with a sale price of $32.75 million–setting a record price per square foot for the 1980s vintage multi-family asset in Oklahoma City. This sale excluded the adjacent 1.54-acre land tract, which is worth approximately $450K, less than 2% of the value of total partnership assets.
*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 Drexel Flats offering that resulted in an approximate % (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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