Sunbelt Fund I Updates > Sycamore Sale
Sycamore Apartment HomesWe are excited to announce the sale of Sycamore Apartment Homes in Fayetteville, NC, the third disposition in Sunbelt Multifamily Fund I (“SB1”). SB1 acquired the property in June 2019, marking our third acquisition in the fund (a nine-asset portfolio prior to commencing dispositions). Sycamore has 50 townhome units and one office space (that we created) and was sold to a 1031 buyer that we sourced directly.
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More on the Sycamore Sale
From our acquisition in August 2019 until our disposition in June 2022, Ballast Rock’s asset and property management teams were able to add significant value to Sycamore Apartments Homes. The previous owner was an absentee landlord, living across the country in California, and our team knew we could rapidly improve performance. To generate the highest return on investment, Ballast Rock not only proved out new high market rents on classic units, increasing top-line rent by $125 per month, but also renovated three units and proved out a renovation premium of an additional $100 per month. As a result, at the time of sale, monthly rents grew by 20% under our ownership.
Other Ballast Rock assets in Fayetteville, NC gave us scale in the market and we wanted to increase our exposure to strong demographic growth, we were able to source Sycamore Apartments through an off-market process. The economies of scale in Fayetteville included sharing leasing, maintenance, and management staff across multiple properties.
As is always the case, our asset management and in-house property management team look for ways to add additional revenue throughout the property. During due diligence, our asset management team recognized that Sycamore’s leasing office building had an abundance of space that could easily be converted into private office space. Within four months of taking over the property, our Sunbelt Properties team had spent $20k to remedy deferred maintenance and improve the building, including installing a new roof, adding a break room, and combining the multiple downed corporate units into one large unit. Through these improvements, our team generated additional revenue by filling the corporate unit while improving prospective tenants' first impression when visiting the property.
In March 2022, Ballast Rock ran a competitive on-market bidding process through Cushman & Wakefield, the largest southeastern multifamily broker by market share. Despite their broad network, our team brought the eventual best bid to the table ourselves: a Ballast Rock investor who was looking to place a 1031 investment. This bidder offered the greatest certainty of close and a highly competitive price.
Sycamore Apartments will net an internal rate or return (“IRR”) of 61% and a multiple on invested capital (“MOIC”) of 3.0x.
Other Ballast Rock assets in Fayetteville, NC gave us scale in the market and we wanted to increase our exposure to strong demographic growth, we were able to source Sycamore Apartments through an off-market process. The economies of scale in Fayetteville included sharing leasing, maintenance, and management staff across multiple properties.
As is always the case, our asset management and in-house property management team look for ways to add additional revenue throughout the property. During due diligence, our asset management team recognized that Sycamore’s leasing office building had an abundance of space that could easily be converted into private office space. Within four months of taking over the property, our Sunbelt Properties team had spent $20k to remedy deferred maintenance and improve the building, including installing a new roof, adding a break room, and combining the multiple downed corporate units into one large unit. Through these improvements, our team generated additional revenue by filling the corporate unit while improving prospective tenants' first impression when visiting the property.
In March 2022, Ballast Rock ran a competitive on-market bidding process through Cushman & Wakefield, the largest southeastern multifamily broker by market share. Despite their broad network, our team brought the eventual best bid to the table ourselves: a Ballast Rock investor who was looking to place a 1031 investment. This bidder offered the greatest certainty of close and a highly competitive price.
Sycamore Apartments will net an internal rate or return (“IRR”) of 61% and a multiple on invested capital (“MOIC”) of 3.0x.
Have more questions?
If you would like to learn more about the team, the Sunbelt strategy, and investing in a Ballast Rock fund, please contact us via email by clicking the button below or IR@ballastrock.com.
