Ballast Rock Real Estate: A Year of Impact - Value Added in 2024

Delivering On Our Commitment

Through its Sunbelt Funds, Ballast Rock Real Estate invests in workforce multifamily apartment buildings in the Southeast. Sunbelt Properties is the in-house property management group for all Sunbelt Funds properties. While the primary focus of our funds is delivering success for its investors, we also pride ourselves on providing safe, clean, and comfortable homes at attractive and attainable rental price-points for our residents.

Throughout 2024, the Ballast Rock Real Estate and the Sunbelt Properties teams worked hand-in-hand to improve both the operational performance and the financial value of our apartment communities, while also respecting and treating them as just that: communities. Through our Sunbelt Multifamily Funds, we continued to deliver on our promise of safe, clean, and comfortable homes through timely and thoughtful interior and exterior property improvements, community events, and focussing on improving the living experience of our residents.

As we look forward to the year ahead, I wanted to take this opportunity to highlight some of Sunbelt Properties’ key wins during 2024 as well as to thank everybody on the team that helped us deliver another incredibly successful year.

Sunbelt Multifamily Fund 3 - First Acquisition

Earlier this year, Sunbelt Multifamily Fund 3 acquired its first asset; Stone Ridge Apartments, a 176-unit community in Birmingham, AL. This recent acquisition provides us with a timely opportunity to highlight some real-world examples of the ways we make a difference in the lives of our residents.

While the previous owners had undertaken an extensive property-wide renovation program, which included a few amenity upgrades, the ownership group had run out of capital to continue to upgrade and maintain the property. Upon acquisition, the property arrived with several deferred maintenance issues that were impacting resident satisfaction, retention, and overall living conditions. The Sunbelt Properties team hit the ground running and have already completed the following after just a few months:

• Replaced roofs property-wide to prevent further leaks and water intrusion and improve the property’s curb appeal

• Replaced or repaired 47 HVACs (27% of total units) to restore air conditioning in units that had not had working air for months

• Repaired the gate at the front of the property to restore the property to being a secure gated community

• Purchased and installed new gym equipment and power washed/cleaned the gym area to refresh and update the look and functionality of the gym

• Implemented after-hours key-fob access to the gym, allowing residents to use the space outside of property management office hours (9am-5pm)

• Repaired the fire alarm and sprinkler system to improve resident safety

• Installed fire extinguishers and cabinets in every breezeway to further bolster fire safety

• Landscaped common areas and trimmed trees to improve curb appeal

While this provides a good sense of the types of improvements we make to our properties after acquisition, below we provide insights into some of the other things we did during 2024 to help improve the communities we serve.

Sunbelt Properties Culture

My leadership team and I spend a lot of time focused on enriching the culture at Sunbelt Properties where we focus heavily on promoting “mentor managing” rather than “micromanaging”. The goal is for regional managers to lead by example, encourage employees to ask questions, and place an emphasis on professional development. All these initiatives are designed to boost employee retention and promote an inclusive environment, so that we can develop and retain great talent.

This focus on culture has not gone unrecognized. In December this year, Sunbelt Properties was named the 15th best place to work in Multifamily per Multifamily Leadership’s annual best places to work in multifamily awards. This is the second year in a row that Sunbelt Properties made the list and improved 8 places in the rankings since last year. Ranked by both the number of submissions and the scoring of responses from a detailed and anonymous employee survey, the award provides a wonderful validation of the culture we have worked so hard to build.

Going the Extra Mile

Community Engagement

Beyond ratings and reviews, our communities have also garnered public accolades over the last year. Both Georgetown Apartments (Moultrie, GA) and Huntingdon Apartments (Albany, GA) received Best of Georgia awards in this year's Georgia Business Journal Real Estate Awards. Georgetown has been a “Best of Georgia Regional winner” in the apartment communities awards for every year since Sunbelt Properties took over management in 2021, while Huntingdon Apartments received a “Best of Georgia Honorable Mention” for the first time this year. This impressive feat would not have been possible without the effort and energy that Kimberly and Donna (property managers) and Danny, Jeorge, and Brandon (maintenance team) put into the properties to make Georgetown and Huntingdon the incredible places to live that they are!

The Georgetown and Huntingdon staff, just like the rest of the Sunbelt Properties team, take pride in the living experience they create for our residents. Beyond providing safe, clean and attractively priced accommodation, the team is constantly organizing events to help build a sense of community. Some of the highlights from the past year are below.

Our property manager and assistant property manager delivered Valentines’ Day goodies to Windtree residents (Fayetteville, NC) on February 14th.

We kicked off the summer in style at Gleneagle (Columbia, SC), Amelia Apartments (Valdosta, GA) and Holiday Cove (Forsyth, GA) with pool, pizza, and food truck parties!

Meanwhile, some of our residents at Springlake (Leesburg, GA) made use of the on-site lake this summer and caught some big ones!

As we headed into school season, the manager at Stone Brooke and Arbordale (Dalton, GA) had residents enter a coloring contest to win a new backpack for the upcoming school year. The winners are pictured below with their new backpacks!

The Sunbelt Properties team never misses an opportunity to celebrate Halloween and this year they passed out treats, wore costumes, transformed leasing offices into haunted houses, and planned Halloween festivities for our residents. Pictured below are our properties in Dalton, GA, Valdosta, GA, Albany, GA, Florence, SC and Fayetteville, NC.

In December, we kicked off Maintenance appreciation week. This included free breakfasts, receiving hampers of goodies (company swag and treats) as well as baskets of “my favorite things” for the maintenance teams across all our properties!

Improving our Properties

While community engagement helps us attract and retain good, long-term residents (and reduces costs associated with turning units), our ability to drive rental growth relies primarily on capital-intensive projects typically associated value-add in real estate: renovating internal units, repairing common-areas, adding amenities such as dog parks or swimming pools, etc.

When completing renovations, we have seen other apartment owners cut corners to get a temporary rent bump without making lasting changes to the units or improving tenants’ living experiences. That is not how Ballast Rock does business. We take pride in the quality we offer to our residents and believe that, by focusing on capital expenditures that offer meaningful improvements in asset quality, our investors are rewarded over the long term, as the value from boosting our community reputation goes well beyond just the physical improvements these projects provide.

Below are some before and after examples of the types of interior and exterior value-add projects we undertake at our properties.

Typical kitchen improvementswill include things like new white cabinet door fronts, vertical hardware, faux granite countertops, black/stainless appliances, vinyl flooring and a subway tile backsplash.

For bathrooms it will be things like updated sink hardware, new quartz countertops, updated modern color scheme for the walls, new shower heads, resurface bath tubs and new vanity cabinets.

These before-and-after pictures highlight the quality of the upgrades we make, which is why we can consistently realize rent increases across our portfolio – we are continually improving the end-product we offer to our renters. Below is an example of the cost/benefit analysis of renovation costs vs expected increases in rents and long term property values.

Conclusion

Property management is simple to understand but difficult to execute. Given how operationally intensive the business is, it is easy to get things wrong. Building the right team reduces our execution risk and allows us to create a virtuous cycle: we can attract and retain the best talent to help improve the quality of our properties, which then allows us to attract the best tenants, ultimately helping to create longer term value for our communities.

The Sunbelt team goes above and beyond for our residents, employees, communities, and properties because we believe that doing the right thing not only benefits our residents, it is also ultimately better for our investors.