Property Details
Asset Profile
Value Add

LURIN EQUITY PARTNERS XXII, LLC: Pensacola, FL Portfolio

Pensacola, FL

Multi-Family Property
Lurin Dallas, TX
Lurin
  • IRR 28.2%
  • Equity Multiple 2.2x
  • Hold Period 3Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash N/R
  • Stabilized Cash on Cash N/A
  • First Distribution Sep 2022
  • Distribution Frequency Quarterly
  • Asset Profile Value Add
  • Loan-to-Value 83%
  • Current Occupancy 87%

About this Property

"A portfolio of 5 Value-Add Multi-family communities in Pensacola, Florida, where LURIN plans to use their in-house Construction and Property Management teams to extensively renovate and reposition the assets in one of the highest performing multifamily markets in the US. "

- Jon Venetos, LURIN

 

Property  5 Property Portfolio
# of Units  494
Current Occupancy  87%
Market Occupancy  96%
Current Average Rent $784
Average Market Rent  $880
Acquisition Price $42,625,000
   
Property Addresses

Bayfront

1200 Scenic Hwy

Creekside

110 Creekside Ct

Colony House

800 Scenic Hwy

Steeplechase

7270 Hilburn Rd

The Oaks

4435 Marlane Dr

Year Built 1964 1985  1966  1987  1973 
Year Renovated N/A N/A N/A N/A N/A
Average SF/Unit 936 957 1,055 738 1,062
# of Units 86 216  84  71  37 
Current Occupancy 85% 87%  92%   89% 84% 
Market Occupancy  96%  96%  96% 96%  96% 
Current Average Rents $787 $1,011  $828  $728  $759 
Average Market Rents $902 $851  $907    $838 904 

Top Questions

All answers are provided by the sponsor, LURIN, or its representatives.

 

Why are you buying these properties?

Jon Venetos, LURIN: "LURIN is under contract to acquire a portfolio of five class-C properties located in Pensacola, Florida, including Bayfront, Colony House, Creekside, Steeplechase, and The Oaks. The portfolio consists of 494 units across the 5 properties with a weighted average year of construction of 1978. The assets are located in one of the best-performing markets for value-add multi-family housing in Florida and are supported by excellent demographics. According to the US Census Bureau, Pensacola’s MSA population is projected to increase 4.3% over the next 5 years. The greater Pensacola MSA is responsible for over $20.6 billion in economic impact annually and is quickly becoming a stronghold for healthcare, financial services, and technology companies as businesses relocate to take advantage of Florida’s business friendly tax environment and diverse employment base. The area added 4,000 jobs in 2019 and continues to gain momentum, positioning the Portfolio to benefit from the regions continued growth. Lastly, the area averaged 4.9% annual rent growth over the past 3 years, vastly outpacing the 10-year average of 3.1%."

"The portfolio was acquired out of bankruptcy in 2018 by Varden Group, a private ownership group based in Atlanta. At the time, all 5 assets were “affordable” properties with corresponding rent restrictions that were subsequently removed through the bankruptcy process. In October 2018, the portfolio was sold to The Warden Group, a privately owned multifamily owner out of New York. Of the 20 properties in their portfolio, these were the only 5 assets located in Florida. Due to the geographic location of their headquarters and structure of their business model, The Walden Group has taken a hands-off approach as evidenced by the engagement of a third-party management and construction company where they have only cured minimal deferred maintenance and not implemented any sort of comprehensive value add program."

"The Pensacola tenant base has a proven appetite for newly renovated communities and units. This provides LURIN with a unique opportunity to utilize its scale in the state of Florida, including our regional management and in-house construction teams. LURIN has experience executing construction and management disciplines in commensurate markets throughout Florida, specifically the panhandle, and a significant value-add opportunity exists across the portfolio. LURIN plans to inject over $15 million (~$30,000 per unit) across the properties to extensively renovate and improve interior units and modernize exterior amenities and common areas. The portfolio will offer a robust set of community amenities along with modernized interiors to meet the strengthening demand in the Pensacola market driving substantial rent growth. Fueled by momentum from a rapidly growing economy and a lack of new construction, Pensacola has experienced a strong increase in both occupancy and rental rates over the past decade. Also a first, year-over-year rent growth in Q1-219 reached the highest level this submarket has experienced in recent history at 8.3%. As of Q2 2020, rent growth has remained strong, demand continues to build, and Pensacola landed within the top 10 rental growth markets in Florida. In terms of whole dollars, effective rents have reached $1,038 and effective rent growth has increased above its historical market average to 2.2%."

 

What are the most important aspects of this investment opportunity for the investors?

Jon Venetos, LURIN:

  1. "Due to LURIN’s industry relationships, they were afforded an early off-market look, allowing for a favorable purchase price without any outside competition."
  2. "The current ownership's approach using both third party management and construction allows for significant upside through a heavy value-add program. "
  3. "LURIN has considerable scale and experience in the Emerald Coast, recently completing and repositioning approximately 500 units in a neighboring sub-market."
  4. "Fundamentals will remain stable in the Pensacola multi-family market, largely stemming from high population growth as well as a limited pipeline (source: CoStar)."

 

What is your investment strategy/business plan?

Jon Venetos, LURIN: "The value creation strategy begins with capping expenses then increasing and stabilizing both occupancy and net operating income. LURIN intends to introduce consistency with regards to management through their own in-house management team, LURIN Property Management (“LPM”). Secondly, LURIN Construction Management (“LCM”) & LURIN Construction Services (“LCS”), will efficiently deliver newly renovated units rivaling the quality of the nicer assets in the area, at a discount, while achieving pro-forma rents.";

 

How has COVID-19 impacted your business plan?

Jon Venetos, LURIN: "COVID-19 has not impacted LURIN’s business plan. While the coronavirus pandemic's future impact is somewhat uncertain, LURIN believes Pensacola is more insulated as little new supply is set to come online and the market continues to show strong fundamentals through the pandemic. Pensacola's main growth drivers are health care, financial services, military, and education, all of which have not seen degradation to date. In addition, LURIN also plans to bring occupancy levels down to 45%, in some cases, in order to renovate and reposition the assets; therefore, LURIN are less concerned about the short-term impact from COVID-19."

 

What are the risks and how are you mitigating those risks?

Jon Venetos, LURIN: "There are a number of potential operational risks associated with this investment, including but not limited to: i) expiration of leases, ii) lease termination and tenant defaults, iii) due diligence may not reveal all property conditions, iv) unexpected delays in construction, v) financing and refinancing risk, and vi) general local market risk for Pensacola, Florida. Additional risks for this investment include an unforeseen material event such as a hurricane or global pandemic. Although there is always a risk of unforeseen issues or events, LURIN believes these risks are mitigated by the use of our vertically integrated platform, controlling construction and operations. Additionally, we engage third party consultants to individually insure each property against unforeseen circumstances."

 

NOTE: All answers provided by the sponsor, LURIN, or its representatives.

About this Property

"A portfolio of 5 Value-Add Multi-family communities in Pensacola, Florida, where LURIN plans to use their in-house Construction and Property Management teams to extensively renovate and reposition the assets in one of the highest performing multifamily markets in the US. "

- Jon Venetos, LURIN

 

Property  5 Property Portfolio
# of Units  494
Current Occupancy  87%
Market Occupancy  96%
Current Average Rent $784
Average Market Rent  $880
Acquisition Price $42,625,000
   
Property Addresses

Bayfront

1200 Scenic Hwy

Creekside

110 Creekside Ct

Colony House

800 Scenic Hwy

Steeplechase

7270 Hilburn Rd

The Oaks

4435 Marlane Dr

Year Built 1964 1985  1966  1987  1973 
Year Renovated N/A N/A N/A N/A N/A
Average SF/Unit 936 957 1,055 738 1,062
# of Units 86 216  84  71  37 
Current Occupancy 85% 87%  92%   89% 84% 
Market Occupancy  96%  96%  96% 96%  96% 
Current Average Rents $787 $1,011  $828  $728  $759 
Average Market Rents $902 $851  $907    $838 904 

Top Questions

All answers are provided by the sponsor, LURIN, or its representatives.

 

Why are you buying these properties?

Jon Venetos, LURIN: "LURIN is under contract to acquire a portfolio of five class-C properties located in Pensacola, Florida, including Bayfront, Colony House, Creekside, Steeplechase, and The Oaks. The portfolio consists of 494 units across the 5 properties with a weighted average year of construction of 1978. The assets are located in one of the best-performing markets for value-add multi-family housing in Florida and are supported by excellent demographics. According to the US Census Bureau, Pensacola’s MSA population is projected to increase 4.3% over the next 5 years. The greater Pensacola MSA is responsible for over $20.6 billion in economic impact annually and is quickly becoming a stronghold for healthcare, financial services, and technology companies as businesses relocate to take advantage of Florida’s business friendly tax environment and diverse employment base. The area added 4,000 jobs in 2019 and continues to gain momentum, positioning the Portfolio to benefit from the regions continued growth. Lastly, the area averaged 4.9% annual rent growth over the past 3 years, vastly outpacing the 10-year average of 3.1%."

"The portfolio was acquired out of bankruptcy in 2018 by Varden Group, a private ownership group based in Atlanta. At the time, all 5 assets were “affordable” properties with corresponding rent restrictions that were subsequently removed through the bankruptcy process. In October 2018, the portfolio was sold to The Warden Group, a privately owned multifamily owner out of New York. Of the 20 properties in their portfolio, these were the only 5 assets located in Florida. Due to the geographic location of their headquarters and structure of their business model, The Walden Group has taken a hands-off approach as evidenced by the engagement of a third-party management and construction company where they have only cured minimal deferred maintenance and not implemented any sort of comprehensive value add program."

"The Pensacola tenant base has a proven appetite for newly renovated communities and units. This provides LURIN with a unique opportunity to utilize its scale in the state of Florida, including our regional management and in-house construction teams. LURIN has experience executing construction and management disciplines in commensurate markets throughout Florida, specifically the panhandle, and a significant value-add opportunity exists across the portfolio. LURIN plans to inject over $15 million (~$30,000 per unit) across the properties to extensively renovate and improve interior units and modernize exterior amenities and common areas. The portfolio will offer a robust set of community amenities along with modernized interiors to meet the strengthening demand in the Pensacola market driving substantial rent growth. Fueled by momentum from a rapidly growing economy and a lack of new construction, Pensacola has experienced a strong increase in both occupancy and rental rates over the past decade. Also a first, year-over-year rent growth in Q1-219 reached the highest level this submarket has experienced in recent history at 8.3%. As of Q2 2020, rent growth has remained strong, demand continues to build, and Pensacola landed within the top 10 rental growth markets in Florida. In terms of whole dollars, effective rents have reached $1,038 and effective rent growth has increased above its historical market average to 2.2%."

 

What are the most important aspects of this investment opportunity for the investors?

Jon Venetos, LURIN:

  1. "Due to LURIN’s industry relationships, they were afforded an early off-market look, allowing for a favorable purchase price without any outside competition."
  2. "The current ownership's approach using both third party management and construction allows for significant upside through a heavy value-add program. "
  3. "LURIN has considerable scale and experience in the Emerald Coast, recently completing and repositioning approximately 500 units in a neighboring sub-market."
  4. "Fundamentals will remain stable in the Pensacola multi-family market, largely stemming from high population growth as well as a limited pipeline (source: CoStar)."

 

What is your investment strategy/business plan?

Jon Venetos, LURIN: "The value creation strategy begins with capping expenses then increasing and stabilizing both occupancy and net operating income. LURIN intends to introduce consistency with regards to management through their own in-house management team, LURIN Property Management (“LPM”). Secondly, LURIN Construction Management (“LCM”) & LURIN Construction Services (“LCS”), will efficiently deliver newly renovated units rivaling the quality of the nicer assets in the area, at a discount, while achieving pro-forma rents.";

 

How has COVID-19 impacted your business plan?

Jon Venetos, LURIN: "COVID-19 has not impacted LURIN’s business plan. While the coronavirus pandemic's future impact is somewhat uncertain, LURIN believes Pensacola is more insulated as little new supply is set to come online and the market continues to show strong fundamentals through the pandemic. Pensacola's main growth drivers are health care, financial services, military, and education, all of which have not seen degradation to date. In addition, LURIN also plans to bring occupancy levels down to 45%, in some cases, in order to renovate and reposition the assets; therefore, LURIN are less concerned about the short-term impact from COVID-19."

 

What are the risks and how are you mitigating those risks?

Jon Venetos, LURIN: "There are a number of potential operational risks associated with this investment, including but not limited to: i) expiration of leases, ii) lease termination and tenant defaults, iii) due diligence may not reveal all property conditions, iv) unexpected delays in construction, v) financing and refinancing risk, and vi) general local market risk for Pensacola, Florida. Additional risks for this investment include an unforeseen material event such as a hurricane or global pandemic. Although there is always a risk of unforeseen issues or events, LURIN believes these risks are mitigated by the use of our vertically integrated platform, controlling construction and operations. Additionally, we engage third party consultants to individually insure each property against unforeseen circumstances."

 

NOTE: All answers provided by the sponsor, LURIN, or its representatives.

Offered By

Lurin

Lurin

Dallas, TX

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Assets Under
Management

Currently
$630MM 10+ assets
Exited
$52MM less than 10 assets
Portfolio LTV
72.3%  
Historical
Realized Returns

Total IRR
N/R  
Equity Multiple
1.65x  
Annual Cash
N/R  
Years Of
Experience

As Principals
less than 5 years  
In Business
5 years  
Size
125 Staff * Dedicated investor relations
* All information is reported by Lurin as of 8/3/2020.
Assets Under
Management

Currently
$630MM 10+ assets
Exited
$52MM less than 10 assets
Portfolio LTV
72.3%  
Historical
Returns

Total IRR
N/R  
Equity Multiple
1.65x  
Annual Cash
N/R  
Years Of
Experience

As Principals
less than 5 years  
In Business
5 years  
Size
125 Staff * Dedicated investor relations
* All information is reported by Lurin as of 8/3/2020.

Financials

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Location Details

Pensacola, FL

Ashley Venetos, LURIN:

  1. "Pensacola has seen high rent growth and significant cap rate compression. For example, the area average 4.9% annual rent growth over the last 3 years, vastly outpacing the 10-year average of 3.1%. The area also added 4,000 jobs in 2019 and continues to gain momentum, positioning the Portfolio to benefit from the regions continued growth."
  2. "The Pensacola multifamily vacancy rate is about 5%. Fundamentals are strong in the Pensacola multifamily market, largely stemming from high population growth as well as a limited pipeline. The vacancy rate continues to hover near historic lows, allowing landlords to aggressively push rents in the market. (Source: CoStar)"
  3. "The Pensacola MSA is quickly becoming a stronghold for healthcare, financial services, and technology companies as business relocate to take advantage of Florida’s business friendly tax environment, quality of life and cost of living, and diverse employment base."
  4. "Two of the five assets are waterfront properties, and the remaining assets are located in close proximity to employers and entertainment."
  5. "LURIN has strong performance with similar assets in nearby locations, including 495 units in Ft. Walton."

Documents

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