37th Parallel Properties - November 2017

Inside

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Our Newest Acquisition

November 2017

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Quality Return Every Time Meet Cutt Ableson

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The Ins and Outs of Apartment Insurance

From Acquisition to Operation

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Thanksgiving at America’s Resort

Our Newest Acquisition

should allow us to benefit from cross- marketing opportunities as well as efficiencies in management and maintenance costs. It took a total team effort to close on Hillcreste. Every member of our team, internally and externally, played a crucial role. When we first received notice that Hillcreste was up for sale, we evaluated the property and submarket before deciding to pursue the deal. From there, we engaged Capstone, our property management team, to drive the asset and neighborhood, shop competing properties, and provide their input on projected operating expenses. We also had our lending team at Berkadia (read more about them on Page 2) evaluate the deal and provide us with several lending options. Armed with market research, lender input, and boots-on-the-ground feedback, we felt very comfortable putting in a competitive offer. Fortunately, our offer was accepted. As we finalized contract negotiations, Dan and I visited the property with our asset management team. We reviewed every lease and inspected every unit on the property. We also personally shopped the local competition and looked for any hidden risks in the investment. At that point, we knew the deal would meet our investors’ standards. We scheduled the offering webinar and notified our investor community about the upcoming opportunity.

Our legal team was brought on to draft the investment documents, and we worked with WealthForge to set up their platform to host the offering. Once the offering kicked off, Don and Patricia spent the next couple of weeks talking to our investors about the opportunity and raising the funds needed to close. While that occurred, we finalized lending and were able to successfully complete the Hillcreste transaction in late September. When the final numbers came in, Hillcreste at Thousand Oaks appraised $150,000 higher than our purchase price. We obtained lending at a lower interest rate than expected along with a slightly higher loan-to-value ratio given the property’s strong financials. We were also able to secure a 12-year term with five years of interest-only payments. Rest assured, we are not done. Andrew Pattacca is closely working with Capstone to ensure the ownership transition is a smooth one, and we are already working on capital improvements at the property. In many ways, Hillcreste is a model property for 37th Parallel and our investors. It is located in a safe and stable neighborhood near several job centers, and it has a favorable upside for long-term performance. We are actively looking for another deal with the same attributes and look forward to presenting one to our investment community in the near future. –Chad Doty

On September 27, 2017, we closed on our latest acquisition: Hillcreste at Thousand Oaks. This 158-unit B-grade property was built in 1986 and is located in a quality submarket of San Antonio, Texas. It represents our second acquisition in 2017 and our second property in the San Antonio market. This property sits less than 1½ miles away from our first San Antonio property, Villas at Henderson Pass, which we purchased in September of 2016. Strategically, the economies of scale between these two assets

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