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Ashley Village represents an opportunity to acquire a well-located value-add asset in North Charleston, a desirable and growing submarket of Charleston, SC. Lurin will seek to reposition the property through a series of interior value-added upgrades geared towards improving the resident profile and maximizing operations in a submarket experiencing positive employment and rent growth. Improvements will include upgrading the exterior and community amenities, enhancing the curb appeal through a comprehensive landscape upgrade, and repositioning the unit pricing relative to comparable rents in the area. By strategically repositioning an undermanaged asset to a “B” quality within the submarket, Lurin seeks to improve the asset’s overall desirability and improve the resident profile.
Although the prior owner has completed over $2.1 million of improvements to the property including enhancements to the unit interiors, community amenities, exterior and overall curb appeal, the current-in-place rents are approximately 10% below market ($0.81/ sq. ft. versus an average market rate of $0.89/sq. ft.). We believe that the prior staff lacked the competitive skill set to complete with other assets in the marketplace and therefore underperformed the market even with all of the capital improvements completed at the property.
Lurin will look to capture increased rents through an accretive unit and amenity upgrade package that targets select common area and unit interior upgrades. In total, $3.5 million has been allocated to such capital expenditures. The total property cost after capital expenditures will be $26.2 million, which equals $100,900 per unit or approximately $89 per square foot. This represents a significant discount to replacement cost as new construction cost, including land, is estimated to be between $170,000 and $175,000 per unit (representing a 40% - 45% discount to replacement cost).
Available to Accredited Investors:
The Charleston market continues to be one of the fastest growing markets in the Southeast. New apartment construction is needed to meet the demand of the rapidly expanding population, but the Historic District development constraints and natural geographic barriers create a unique complexity for aspiring apartment developers. As a result, land prices are rising and rental rates on the Peninsula are among the highest growth anywhere in the Southeast. Rapid rent growth coupled with constrained supply on the Peninsula has prompted rapid expansion into the suburbs, such as North Charleston, making the Charleston multifamily market particularly attractive for investors.
The Charleston region is expanding by 34 new residents each day, and is the 74th largest U.S. metro by population. With more than 761,000 residents, the Charleston MSA is the third largest metro area in South Carolina and is growing three times faster than the U.S. average. Between 2010 and 2016, the population growth for the Charleston MSA was 14.5% versus 4.7% in the United States. Due to the continued relocation and expansion of major companies such as Boeing, Bosch, Mercedes and Volvo it is anticipated that the Greater Charleston population will grow 4.9% over the next five years, reaching almost 800,000 residents.
Ashley Village Townhomes is conveniently situated between I-26 and SR-642 in the city of North Charleston. Residents are located near a cluster of amenities based along the I-26 corridor, including Northwood Mall, the second largest shopping center in the Tri-County area. The property is also within a five-mile drive of several top employers, such as Boeing’s two campuses and Joint Base Charleston, the largest overall employer in the city of Charleston. As of July 2017, the city of North Charleston had an unemployment rate of 3.4%. 63% of the employees in this area are employed in white-collar jobs.
Available to Accredited Investors:
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The first projected distribution is scheduled for September 2019.
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