Realized Deal : Sonoma Villas and Pines

Sponsored By Henley USA

Risk Profile
Amount Invested
Targeted IRR
Actual IRR*
Targeted Equity Multiple
Actual Equity Multiple*
Targeted Hold Period
4.0 years
Actual Hold Period
1.5 years

In June 2017, Henley USA launched an offering in CrowdStreet’s Marketplace for the repositioning of two existing multifamily housing communities from Class C to B in the Phoenix metro area (481 units in total). Henley USA sourced the transaction off-market through a relationship with the property management company. The business plan called for the sponsor to invest an additional $5,000 per unit and focus on value creation through renovations to common areas including the clubhouse, pool deck, and landscaping.

Project Timeline

Exterior Renovations Completed

June 2018

By the end of Q2 2018, all exterior painting, landscaping and primary signage work was completed. Additionally, both leasing offices, fitness centers, dog parks and pools/pool lounges were open and fully operational. At that point, approximately 200 units (42%) were renovated.

Listed for Sale and Under Contract

December 2018

Cap rates in the Phoenix market were compressing, indicating rising prices in the market. In Q2 2018, Henley USA received a Broker’s Opinion of Value (BOVs) indicating that the assets could be sold early in year two at a price that was originally underwritten for year four. Given the strong submarket conditions, Henley USA listed the properties for sale in Q3 2018 and in the subsequent quarter both properties were placed under contract.

Early Exit

April 2019

Both properties were officially sold in April 2019. At the time of exit, inception-to-date rent increases exceeded original underwriting projections. Henley USA had renovated and released 380 units (79%) with light interior upgrades, leaving some upside for the future owners.

Final Outcome

Favorable market conditions and successful business plan implementation created the opportunity for Henley USA to exit the investment approximately two years earlier than planned and achieve a higher-than-projected IRR for investors due, in part, to the early exit. 

*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 Sonoma Villas and Pines offering that resulted in an approximate 36% (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.

The report partially relies upon the sponsor’s explanations, the information contained within sponsor-produced quarterly reports, and conference calls. This analysis is not an assertion of independently verified facts but, rather, is for informational purposes only, to convey CrowdStreet’s understanding of what transpired.

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