Atlanta, GA Multifamily, DST

Atlanta, GA

ASSET CLASS:  Class-A Multifamily
OFFERING SIZE:  $22,400,000
MINIMUM INVESTMENT:  $100,000
LEVERAGE:  55.00%
YEAR-1 YEILD:  5.09% / 5.30%
UNITS:  200
HOLD PERIOD:  7-10 Years
TARGETED YR.-1 RETURN:  5.30%

Class-A property heavily re-developed in 2017 with new roofs, plumbing, electrical, exterior walls, stairwells, parking lot, doors, windows, appliances, HVAC.  Modern amenities and finishes including clubhouse with game rooms, spinning room, fitness center, pool with sundeck, engineered wood flooring, and all new kitchens.

The Project is located in an unincorporated area of Cobb County, Georgia, and within the Atlanta-Sandy Springs-Roswell, Georgia, metropolitan statistical area (“MSA”). The Atlanta MSA includes 29 counties which encompass more than 8,000 square miles. According to the United States Census Bureau, Atlanta is the 9th largest in the nation, with a 2017 estimated population of 5,884,736, representing an annual growth rate of approximately 1.4% per year over the 2010 census population of 5,286,728. The population growth in Atlanta has exceeded both that of the State of Georgia and the nation which had growth rates of 0.8% and 1.3%, respectively over the same period.

The metro Atlanta area is home to 13 Fortune 500 and 24 Fortune 1000 headquarters. Job creation in the area has been spurred by corporate expansions such as State Farm and Athena health as well as significant growth in high-tech employment; Fiserv, an IT provider for financial services, is investing $41 million in a new campus in Alpharetta and expects to add hundreds of jobs throughout the remainder of this decade.

Emory University is the largest private employer and one of the largest secondary education institutions in the region. It is one of the world's leading research universities and hospitals. Emory is located in the northeast Atlanta metro area, near North Decatur. It was founded in 1836 and had over 14,700 full-time students during the fall enrollment of 2015. In addition, Atlanta is also home to the Georgia Institute of Technology, better known as Georgia Tech. Georgia Tech is located in downtown Atlanta and is ranked #7 among public universities in the country by U.S. News & World Report, and the Georgia Tech College of Engineering is consistently ranked in the nation's top five by the magazine and Georgia Tech’s industrial engineering program has been ranked #1 for more than two decades. The school was founded in 1885 and today it enrolls more than 15,100 undergraduate students. Atlanta International Airport Hartsfield-Jackson is located about 15 miles south of the city’s central business. The airport construction was completed on April 16, 1925, and in 1930 was already in the top three busiest airports in the US. It currently has 195 boarding gates, 186 of which are international. Atlanta International Airport is a major hub to Southwest, Delta Air Lines, and Delta Connection, partner of Atlantic Southeast Airlines. Moreover, it is the largest Delta hub in the world.

Atlanta’s $300 billion economy is thriving again with strong job growth, corporate in- migration, and high rates of population growth. Its central location, large magnetizing economy, broad industry base, popularity with Millennials, and affordability for business and residents are main supports. Among the strengths of the Atlanta area are a business-friendly environment, a diverse economy, strong in-migration and population growth, and a strong transportation and distribution infrastructure. Weaknesses include high debt burdens and weak credit quality, and an overtaxed infrastructure. Job growth is expected to maintain or exceed current levels for many years to come. In turn, demand for residential housing should also remain strong. With building continuing, there are still no signs to date of a general downturn in the health of the real estate market. Millennials, empty-nesters, and students form a deep renter pool while the homeownership rate in metro Atlanta has softened, signaling that renting is a preferred lifestyle choice for many. In addition, robust job creation, strong population in-flows, and corporate migration to the area result in expansions of the renter pool. The metro area’s economic diversity and current development steam will keep Atlanta on track to outperform the nation over the long term.

According to a REIS.com Performance Monitor report for the Atlanta apartment market containing 1st quarter 2018 information, the vacancy rate has fallen from 12.0% to 3.7% by the end of the third quarter of 2016. However, recent development has added inventory faster than the market has been able to absorb, allowing the vacancy rate to steadily increase to 4.8% as of the end of the 1st quarter of 2018, unchanged during the 2nd quarter of 2018. More than 9,000 new units were completed in both 2016 and 2017, and nearly 11,000 new units are anticipated to be added in 2018. New development is not anticipated to taper off until 2020, allowing the vacancy rate to rise to 5.5% by year-end 2020 prior to stabilizing.

Rental rates are still showing steady signs of growth. In 2017, the Atlanta market average increased by 4.7%, picking up another 2.2% during the first half of 2018 to reach a level of $1,169/unit per month. REIS projects an average market rental rate gain of 4.6% in 2018, with anticipated gains averaging 3.08% over the next five years. The Project is furthermore located within the Marietta submarket. Conditions within the submarket compare favorably to the overall market. The vacancy rate is currently 3.5%, unchanged from the level found one year ago. In 2018, 760 new units are forecast to be delivered into the market allowing the vacancy rate to spike, however, no forecasted completions are on the horizon thereafter, allowing the vacancy rate to fall again.

Pursuant to the Second Half 2017 CB Richard Ellis Cap Rate Survey, on a national basis cap rates for suburban multifamily fell by seven basis points from mid-year 2017 to reach a level of 5.59%, down 14 basis points from year-end 2016. Suburban multifamily properties in all classes saw a decline in cap rate during the 1st half of the year with Class A decreasing by seven basis points, and Class B and C decreasing six and nine basis points, respectively. Cap rates among suburban Class A properties average 4.96%, Class B cap rates average 5.49% and Class C cap rates average 6.32%. Going forward CBRE projected stable pricing conditions; 84% of surveyed real estate professionals expect little or no change in cap rates during 2018. As of the date of this report, the full 1st half 2018 CBRE Cap Rate Survey has not been released, however, CBRE had released a 1st half 2018 Advance Survey. According to the report, cap rate for suburban multifamily properties declined among all classes, although the decline was minimal. Overall, capitalization rates declined by 6 basis points to an average capitalization rate of 5.53%. Class A capitalization rates declined just 2 basis points to an average of 4.94%, however, both Class B and Class C capitalization rates declined by 8 basis points to an average of 5.41% and 6.24%, respectively. Specific to the Project, the 1st Half Advance Survey reports capitalization rates on suburban multifamily within the Atlanta metro range between 4.25% and 5.0% for Class A assets and between 5.0% and 5.5% for Class B assets.

Total Private Placements: 8
Total Assets Purchased: NA
Full Cycle Multifamily Offerings: 0
Years In Business 15

Management Company: Greystar
Properties Managed: 1,600
Units Managed: 437,000
Date Founded: 1993
Headquarters: National
Website: https://www.greystar.com

1st-Year Cash-on-Cash: 5.30%
Projected Cash Range: 5.09% - 6.03%
Projected Cash Average: 5.48%

All-In Price:: $45,379,000
Purchase Price: $38,000,000
Appraised Value: $38,200,000
Loan Amount: $22,979,000
Equity Raise: $22,400,000
Reserves: $2,195,689
Reserves to All-In Price: 4.84%
Net Load: $5,183,311
Net load to equity: 23.14%
Net Load to All-In Ratio: 11.42%
Appraised Net Load: $4,983,311
Appraised Net Load to Equity: 22.25%
Appraised Net Load to All-In Price: 10.98%
All-in $/Ft.: $231.43
All-in $/Unit: $226,895

Net Operating Income: $2,158,400
Purchase Cap Rate: 5.68%
All-In Cap Rate: 4.75%
Cap Rate Spread: 93 bps
Breakeven Exit Cap: 6.23%
Breakeven Exit Cap Rate Spread: 55 bps
Appraised Cap: 5.65%
Appraised Cap Rate Spread: 58 bps

Term: 10 Years
Interest Only Period: 5 years
Amortization Period:. 30 years
Interest Rate: 4.31%
Prepayment: 1% / 114 Months
Lender: KeyBank
LTV:. 55.00%

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(415) 336-9225

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The contents of this communication: (i) do not constitute an offer of securities or a solicitation of an offer to buy securities, (ii) offers can be made only by the confidential Private Placement Memorandum (the “PPM”) which is available upon request, (iii) do not and cannot replace the PPM and is qualified in its entirety by the PPM, and (iv) may not be relied upon in making an investment decision related to any investment offering by the issuing company, or any affiliate, or partner there of the issuer. All potential investors must read the PPM and no person may invest without acknowledging receipt and complete review of the PPM. With respect to the “targeted” goals and performance levels outlined herein, these do not constitute a promise of performance, nor is there any assurance that the investment objectives of any program will be attained. These “targeted” factors are based upon reasonable assumptions more fully outlined in the Offering Documents/ PPM. Consult the PPM for investment conditions, risk factors, minimum requirements, fees and expenses and other pertinent information with respect to any investment. These investment opportunities have not been registered under the Securities Act of 1933 and are being offered pursuant to an exemption therefrom and from applicable state securities laws. Past performance and statements regarding current occupancy and earnings are no guarantee of future results. All information is subject to change. You should always consult a tax professional prior to investing. Investment offerings and investment decisions may only be made on the basis of a confidential private placement memorandum issued by the issuer, or one of its partner/issuers. The issuer does not warrant the accuracy or completeness of the information contained herein. Some offerings are subject to a “cooling off” period and are not available to all investors. 
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Securities offered through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC, and the issuer are not affiliated.