Realized Deal : Timber Oaks Apartments

Sponsored By Windmill Investments, LLC

Risk Profile
Amount Invested
Targeted IRR
Actual IRR*
Targeted Equity Multiple
Actual Equity Multiple*
Targeted Hold Period
5.0 years
Actual Hold Period
2.8 years

In November 2014, Windmill Investments, LLC (“Windmill”) launched an offering for a 180-unit, Class A, multifamily investment opportunity in the rapidly growing Dallas Metro area.

Windmill sourced the transaction off-market through a direct relationship after a previous potential buyer failed to perform. While the property was already in excellent physical condition and not in need of any major capital improvements, Windmill believed it was undermanaged with rents well below the market levels. Through the implementation of better management policies and the introduction of certain minimal upgrades and amenities (i.e., dog park, updated BBQ area, remodeled leasing office), the business plan anticipated quickly capturing higher rents and occupancy, in turn creating strong cash flow and capital appreciation.

Project Timeline

Favorable Market Conditions

December 2015

At the end of 2015, Windmill learned that the city had rejected applications for building permits for two of the larger nearby developments in the pipeline. As a result, this would help restrict the number of new units coming to market in 2016 and 2017, thus benefiting future occupancy and rent increases at Timber Oaks Apartments.

Strong Performance Continues

December 2016

By the end of 2016, Windmill had increased rents by nearly $200 resulting in a monthly billing increase of approximately 17% year-over-year. However, the occupancy had begun to slightly decrease, signaling that Windmill had exceeded current market rents. Consequently, Windmill planned to pull back on asking rents, offer concessions, and focus on re-evaluating optimal rent levels that would sustain the targeted 95% occupancy.

Early Exit

December 2017

The asset’s strong performance and Windmill’s expectation that capitalization rates would begin decompressing over the next few years in the Dallas area prompted Windmill to begin exploring the idea of a possible sale in early 2017. In the third quarter, Windmill came to an agreement with a buyer to sell the property at a price that was originally targeted at the end of the five-year hold. The transaction officially closed in late December.

Final Outcome

Strong rental demand, favorable submarket conditions, and effective management created the opportunity for Windmill to successfully execute the business plan and exit the investment approximately two years earlier than planned, achieving strong returns for investors in-line with the original offering.

*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 Timber Oaks Apartments offering that resulted in an approximate 18.2% (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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