Sunbelt Fund II Updates > Launch of Sunbelt Multifamily Fund II
At Ballast Rock Capital we create high-income generating, tax-shielded, diversified real estate funds with a positive social impact. We differentiate ourselves with high performance, frequent communication, detailed reporting, and ready access to the management team.
With our on-the-ground deal teams across the Southeast and in-house property management, we have the right experience to acquire, manage and oversee value-add projects across our portfolio of workforce multifamily real estate assets. The principals invest our own capital alongside our investors, aligning our interests, and delivering safe, clean, and affordable homes for residents in our communities.
Given the success of Sunbelt Fund I (“SB1”) the Ballast Rock team are proud to announce the launch of Sunbelt Multifamily Fund II LP (“SB2”). We have proven we are an experienced team, with a successful strategy, in a growing geography, and we look forward to sharing in the success of SB2. Download SB2 Presentation
With our on-the-ground deal teams across the Southeast and in-house property management, we have the right experience to acquire, manage and oversee value-add projects across our portfolio of workforce multifamily real estate assets. The principals invest our own capital alongside our investors, aligning our interests, and delivering safe, clean, and affordable homes for residents in our communities.
Given the success of Sunbelt Fund I (“SB1”) the Ballast Rock team are proud to announce the launch of Sunbelt Multifamily Fund II LP (“SB2”). We have proven we are an experienced team, with a successful strategy, in a growing geography, and we look forward to sharing in the success of SB2. Download SB2 Presentation
What are the basics of SB2?
SB2 will be a $50mm equity raise to acquire an expected 10-12 deals ($120-135mm of assets) during 2021 and 2022. We already have multiple deals under contract to seed this fund (Sunbelt Fund II target pro forma).
What best positions the Ballast Rock SB2 strategy for success?
The outsized demand/supply mismatch in the workforce housing sector and the demographic growth of the Southeast allow us to offer particularly attractive risk adjusted returns. Our quantitative and qualitative acquisition criteria have been honed over years of investment experience in the sector. Our unparalleled deal access and the sheer volume of deals we underwrite enables us to filter for the best available opportunities in our markets that fit our investment thesis. Our in-house property management enables us to have the control needed to consistently deliver on our underwriting
Why is the Ballast Rock SB2 strategy right for passive real estate investors focused on immediate income?
SB2 will acquire income generating workforce multifamily assets, implement value-add projects to increase revenue through investment, and professionalize the operations and management to stabilize costs. We do the hard work so our investors don’t have to. We pay dividends that start to accrue from the day we deploy investors’ capital. Dividends are paid on a quarterly basis - on the 10th of the month following quarter end - and a bonus coupon is paid along with the 4th quarter payment if there is excess cash-flow from income in a given year.
Why Now?
Despite the continued and relatively consistent rally in the workforce multifamily sector over the past 30-years, we believe there is more rally ahead. Both rallying interest rates and the strength of performance in the workforce multifamily sector during the Covid-19 crisis (and particularly when compared to other real estate sectors) have led to a flood of fresh capital into the sector, with plenty more to come for the foreseeable future. Despite this, net interest margins ("NIM") – or the difference between the unlevered yield of an asset and the cost of borrowing – are at their widest in 30yrs (see graph below), making now an extremely attractive time to be acquiring multifamily with plenty of capacity for further rally as NIM returns to the historic mean.
What gives the Ballast Rock team confidence they can deliver performance similar to SB1 in a second fund despite changing market conditions?
The Ballast Rock team have lowered our promote fee structure significantly in SB2 compared to SB1 as the market in the Southeast has continued to rally, enabling us to confidently offer consistent return targets for investors across the two funds (SB1 & SB2 Summary Comparison)
How can I learn more and make a reservation to invest?
Please log into your investor portal to access SB2 legal documentation and to make a reservation that gets you in the first-come, first-serve capital deployment queue. Reservations taken at launch are likely to be capital called in Q2/Q3. As we take more reservations that timeline will change.
