Property Details
Repeat Sponsor  Below Market Rents  NOI Growth 
Asset Profile
Value Add

Bellevue at Sheridan Apartments

Tulsa, OK

Multi-Family Property

This deal is oversubscribed

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Nicholas Residential LLC Dallas, Texas
Nicholas Residential LLC
Targets
  • IRR 18.2%
  • Equity Multiple 2.11x
  • Hold Period 3-5Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash 7%
  • Stabilized Cash on Cash 10% in Y3
  • First Distribution Mar 2019
  • Distribution Frequency Monthly
  • Asset Profile Value Add
  • Loan-to-Value 68%
  • Current Occupancy 97%

About this Property

The Seller of the Property has left all 256 units in their original interior state, allowing the Sponsor to acquire a 1980’s vintage asset with untapped value-add potential. Having recognized this opportunity in a rapidly growing market, the Sponsor seeks to leverage the growth of Tulsa’s South Tulsa / Broken Arrow submarket and implement a unit enhancement program to generate significant returns for investors. The Sponsor anticipates the interior value-add program to cost approximately $3,500 per unit and generate average rent premiums of at least $75 per unit monthly. All 265 units will be equipped with stainless steel appliances, new or refinished cabinets, cabinet hardware, faux granite countertops, vinyl wood flooring in wet area, upgraded lighting, upgraded plumbing fixtures, two tone paint, kitchen backsplashes, and 2 inch blinds. The Sponsor expects renovations to be completed at a rate of 11 units per month, which would allow the enhancement program to be complete within the first two years of operation. As per the Sponsor’s pro forma analysis, the projected NOI upon exit is $1,404,978, significantly higher than the $849,875 acquisition NOI. Additionally, pro forma projects exit gross sales proceeds of $23,416,300, approximately $7,000,000 higher than the acquisition price. The Sponsor’s anticipated exit cap rate is 6.00%.

Key Points

  • Rare Value-Add Opportunity: The Property’s unit interiors have remained unchanged since original development in 1985. This allows the Sponsor to capitalize on a vintage 1980’s asset while implementing a unit enhancement program to increase rent rates.
  • Affordable Option in Exclusive Neighborhood: The Property is located in one of Tulsa’s most expensive and exclusive neighborhoods. The property value range in the area is $400,000 - $2,000,000 and the average household income exceeds $146,000 (over 100% over the Tulsa MSA average). With affordable rates, the Property allows residents to benefit from the location without paying heavy premiums.
  • Top School District: The Property falls within the Jenks Public School district, which is consistently ranked among Oklahoma’s top public school districts. This makes the Property a great option for families looking to provide elite education for their children.
  • Minimal Exterior Expenditure: The Seller remodeled exteriors, upgraded the resident clubhouse, renovated the swimming pools, and enhanced the fitness center in 2015. The Sponsor will have little to no deferred maintenance as a result.
  • Encouraging Market Fundamentals: Both Tulsa metro and the Property’s submarket have experienced significant demand over the past few years. Coupled with a conservative pipeline, occupancy and rent rates are projected to remain high in the near term.
  • Class B Multifamily Performance: Two to four star multifamily properties have performed considerably well in the Property’s submarket. These properties experienced an average rent growth of 3.3% in the past year, outpacing the metro by 1.2%. The average vacancy was 9.1%, which was 0.7% lower than the Tulsa metro average.

Offered By

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Assets Under
Management

Currently
$425MM 10+ assets
Exited
$204MM 10+ assets
Portfolio LTV
70%  
Historical
Realized Returns

Total IRR
28.6%  
Equity Multiple
2.3x  
Annual Cash
11.8%  
Years Of
Experience

As Principals
15+ years  
In Business
3 years  
Size
35 Staff * Dedicated investor relations
* All information is reported by Nicholas Residential LLC as of 11/9/2018.
Assets Under
Management

Currently
$425MM 10+ assets
Exited
$204MM 10+ assets
Portfolio LTV
70%  
Historical
Returns

Total IRR
28.6%  
Equity Multiple
2.3x  
Annual Cash
11.8%  
Years Of
Experience

As Principals
15+ years  
In Business
3 years  
Size
35 Staff * Dedicated investor relations
* All information is reported by Nicholas Residential LLC as of 11/9/2018.

Financials

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Offering Financial

Location Details

Tulsa, OK

The Place at 101 Sheridan Apartments is located in south-east Tulsa, approximately 20 minutes from downtown. It is within a mile of the Creek Turnpike and about a mile from highway 64. Both the turnpike and highway 64 provide direct access to Tulsa’s main interstates, which makes getting downtown and to other neighborhoods easy. The turnpike intersects with Interstate 44, the primary route to Oklahoma City. The Property is also located near major retail centers with numerous shopping and dining options. Approximately .6 miles away, there are stores like Costco, Target, and Sprouts, while just a few miles from the site, there is the Square 91 Shopping Center and the Woodland Hills Mall.

The Property is located adjacent to one of Tulsa’s most desirable residential neighborhoods. Property values in this area range from $400,000 to $2,000,000 and is within the boundaries of the Jenks Public School District, which is one of the top-ranked school districts in Oklahoma. The Property, also within this PSD boundary, offers an affordable option while benefiting from being in this area of Tulsa.

The multifamily market in Tulsa has been performing well over the past few years. Employment has stimulated demand, while the introduction of new product has been slow. This variance has increased rent rates across the city while keeping vacancy rates low. Performance is projected to stay strong as the sales activity continues to grow and supply remains stagnated. The Property’s submarket, South Tulsa / Broken Arrow, has out-performed the greater metro market in the two to four star property range over the last year. The average rent growth of these properties was 3.3%, approximately 1.2% higher than the metro average. The submarket’s average vacancy rate of 9.1% is .7% lower than the greater market average.

Tulsa has also just launched the Tulsa Remote Program, which pledges to pay remote workers $10,000 is they commit to living in Tulsa for one year. The program is designed to entice young professionals as well as shape the community and stimulate the economy long term.

Documents

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Offering Agreement Documents

Frequently Asked Questions

Below are some of the most frequently asked questions about this offering.

No. While the OM Reads that cash-flow will be split 90/10 to a 10% IRR, the PPM reads that 100% of cash flow will be distributed pro rata to “investors” until a 10% return has been achieved. Since this deal is structured as a 90/10, that is 90% of funds from the LP, 10% of funds coming from the GP/Sponsor, 100% of cash-flow will be split 90/10 until the first hurdle (10% IRR) has been achieved.

Nicholas Residential’s founder Paul Panza has had a relationship with the top two real estate crowdfunding companies dating back to 2013 and has completed funding for 10 deals consisting of more than 3,000 units and $200m in multifamily assets through both portals. In the early crowdfunding days, after much research, Mr. Panza settled on the “direct-to-investor” model of crowdfunding over capital “aggregators” that pool funds into one entity and invest in a project without any direct relationship with the sponsor. This was particularly important to Paul and his team, as building long term relationships with investors is paramount to purely raising capital. This structure has been the driving force behind Nicholas Residentials long relationship with the direct-to-investor portals and complete avoidance of the aggregation model, which has most recently proved unsustainable. In the past, Nicholas has launched deals on both portals simultaneously, but in an effort to avoid confusion among investors, the company has decided to launch new deals on one portal at a time, with short 30-day timelines, and a portion of total equity capital allocated to each site. This allows Nicholas to build new relationships with investors that are “unique” to each portal, while continuing to nurture existing relationships with investors who “cross-over” both sites.

Nicholas has allocated a total of $1m to the RealCrowd portal and the deal will be closed to new investors once that allocation has been met. The company also has the ability to close new acquisitions on its balance sheet and back-fill any remaining equity should the need arise. Syndicated equity transactions, in which Nicholas works with a handful of high-net-worth accredited investors, represents only a small portion of the company’s total investor base, which also includes a network of family offices, institutions, pension funds and money managers across the US and abroad. Most recently, the firm acquired a 6-property, 2,200 unit Multifamily REIT in Houston with a total equity raise of more than $70m.

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