Investment Details
  • Location Boston, Massachusetts
  • Investment Type Equity 506(b)
  • Property Type Multi-Family
  • Distribution Schedule Quarterly
  • Targeted Hold 5 - 7 Years
  • Targeted IRR 14.00 - 16.00%
  • Targeted Cash on Cash 7.00 - 9.00%
  • Total Transaction Size $6,907,150
  • Minimum Investment $5,000

Boston Multi-Family Portfolio Boston, Massachusetts

 Confidential Private Placement Memorandum - December, 2015

 This property is no longer open for investment. In the future, shares may appear on the exchange.

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About This Investment

Acquire Real Estate is pleased to offer an investment opportunity in The Boston Multi-Family Portfolio (“Properties”, "BMP" or “Portfolio”).  The Portfolio was recently purchased by an investment syndicate sponsored by Arx Urban (“Sponsor”).  Acquire Multi-Family Boston LLC (the “Company”) owns 14.9% of the Membership Interests in the Sponsor’s investment syndicate.

Investment Entity  Acquire Multi-Family Boston LLC (the “Company”)
Investment Entity Manager Acquire Advisory LLC (the “Manager”)
Offering Type Equity
Offering Amount $315,000
Ownership Interest in Sponsor Syndicate 14.90%

Acquire Real Estate Investor Projected Returns

Avg Cash on Cash (average annual cash on cash throughout investment period)  7.7%
IRR 14.3%
Equity Multiple 2.3

Executive Summary

The Boston Multi-Family Portfolio is comprised of two fully leased properties totaling 49 units and located in Boston’s historic Dorchester neighborhood. This submarket is densely populated and has experienced population growth of more than 6% over the last five years. The area is presently well-positioned for outsized rent growth and capital appreciation.

The Sponsor believes that there are numerous opportunities to improve operations, increase rental income and create added value for the Portfolio. The proposed improvements to the Properties include major cosmetic enhancements to both the interior and exterior of the buildings, improved amenities, an energy retrofit and solar installation, enhanced branding and the hiring of an institutional property manager.

Investment Highlights

Attractive Basis and Durable Yield

The properties were purchased in November 2015 for $6.525M ($133k/unit), which is significantly below the replacement cost and current market value. The purchase price also represents an attractive capitalization rate of 6.0% on in-place NOI and a 7%+ stabilized cap rate.

Value-Add Opportunity

Rents at the Properties are currently more than 20% below market due to a passive previous manager. This provides the opportunity for the Sponsor to make many common area and in-unit improvements, re-brand the Properties, and add amenities to bring the units up to market value.

Institutional Management

The Sponsor will be partnering with Trinity Management to oversee the daily operations of the properties and their re-positioning. Trinity manages a total of over 5,000 units with 577 units in proximity of the properties.

Transforming Neighborhood

Located in the Savin Hill and Adams Village neighborhoods, the Properties are only a few minutes from downtown Boston via public transportation. Both of these neighborhoods are currently undergoing revitalization through significant private and public development.

Investor Returns

This calculator predicts your cash flow based on your initial investment and the targeted returns for the property. The output is based on an investment made on day one of the offering.

Returns
Total Proceeds
Total Profit
Average Cash On Cash
Internal Rate of Return
Equity Multiple
Ownership
Total Basis
Legal Fees
Percent Ownership
* The return of capital fee is only processed once the investor receives a full return of initial capital, excluding operating distributions.

Property Description

The Sponsor considers the Properties to be “workforce housing,” defined as apartments in which the actual rental rates are close to the asking rates and vacancies are typically filled within a few weeks.

Proposed capital improvements to the Portfolio include exterior enhancement with new signage, awnings, fencing and landscaping. Common area upgrades will include new carpet, handrails, lighting and paint. Overall unit improvements will include new kitchen cabinets, counters and appliances as well as new bathroom tile and vanities.

Other opportunities to create value, improve operations and increase rental income include adding laundry rooms, security systems and keyless entry; streamlining parking operations; conducting a full energy assessment to guide energy retrofits; enhancing the property branding and marketing strategy; and partnering with an institutional property manager.

200 Hancock Property Details

Site Description:  
Property Address 200 Hancock Street, Boston, MA 02124
Total Land Area 16,626 square feet
Total Building Area 30,800 square feet
Units 37
Year Built 1968
Parking 20 Spaces
Construction Details:  
Stories 4
Exterior Brink and Mortar
Interior/Finishes Wood paneled cabinetry, Formica countertops, range, refrigerator, hard wood and tile flooring in units with carpet in corridors
Utilities Tenants pay for heat, hot water and electricity, landlord pays for water, common area electricity and trash 
Proposed Capital Improvements Exterior enhancement with new signage, awnings, fence and landscaping; Common area upgrades with new carpet, handrails, lighting and paint; Unit improvements with new kitchen cabinets, counters and appliances and new bathroom tile and vanities

 90 Wrentham Property Details

Site Description:  
Property Address 90 Wrentham Street, Boston, MA 02125
Total Land Area 10,462 square feet
Total Building Area 10,140 square feet
Units 12
Year Built 1968
Parking 12 Spaces
Construction Details:  
Stories 3
Exterior Brink and Mortar
Interior/Finishes Wood paneled cabinetry, Formica countertops, range, refrigerator, hard wood and tile flooring in units with carpet in corridors
Utilities Tenants pay for heat, hot water and electricity, landlord pays for water, common area electricity and trash 
Proposed Capital Improvements Exterior enhancement with new signage, awnings, fence and landscaping; Common area upgrades with new carpet, handrails, lighting and paint; Unit improvements with new kitchen cabinets, counters and appliances and new bathroom tile and vanities

Investment

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Market

Location Overview

The Properties have excellent visibility in two amenity-rich urban locations; both are proximate to public transportation as well as many retail stores and restaurants. 200 Hancock Street, located in the Savin Hill neighborhood, has a walk score of 89 and is only 0.6 miles from the Savin Hill MBTA Redline Station (a 9-minute commute into downtown Boston.) 90 Wrentham Street, in the Adams Village neighborhood, has a walk score of 80 and is just 0.4 miles from the Ashmont MBTA redline station (a 16-minute commute into downtown Boston.)

Proposed and New Developments

The following several new key developments are planned and/or underway near the Properties.

  • Dot Block: A proposed $75 million mixed-use development located across the street from 200 Hancock Street.
  • Ashmont Mixed-Use: A new 84-unit condominium building with additional retail amenities that will be constructed by Trinity Financial near 90 Wrentham Street.
  • Maxwell Box Factory: Located in nearby Uphams Corner, the city of Boston is selling this 20,000 square foot site for the development of 80 mixed-income units.
  • Russell Engineering Building: Located next to the proposed Dot Block, this property was recently acquired by Gerald Chan, a businessman who owns $120 million of property in Harvard Square.
  • Boston Teachers Union: Plans have been filed to replace the existing 32,500 square foot headquarters of the Boston Teachers Union with a two-story complex.
  • Adams Village: This neighborhood is poised for incremental but substantial improvements in the coming months.

Market Overview

The Metro Boston Apartment Submarket consists of nearly 450,000 apartments with an overall vacancy rate of just over 3% and average rent at $1,705 across all classes. The continued growth of rents and low vacancy over the last few years signifies the overall strength of the submarket. Rental growth is projected at 3.9% and vacancy is expected to remain relatively the same over the next five years.

Workforce Housing

There has been significant growth within Boston’s inner-ring submarkets as young and affluent populations seek to live closer to work and entertainment. As these submarkets and neighborhoods have become more popular, rental rates have increased exponentially. In fact, 35% of Boston's total population is between 20 and 34 years old--the largest percentage in the nation and the ideal demographic for renters.

City Total Population 20-34 Yr-Olds % of Population
1. Boston 617,594 216,213 35.0%
2. Austin 790,390 251,064 31.8%
3. Washington 601,723 188,855 31.4%
4. Seattle 608,660 181,501 29.8%
5. Columbus 787,033 233,163 29.6%
6. San Francisco 805,235 228,738 28.4%
7. Denver 600,158 170,518 28.4%
8. Chicago 2,695,598 738,578 27.4%
9. San Diego 1,307,402 358,234 27.4%
10. Nashville 601,222 163,793 27.2%

According to the Greater Boston Housing Report, more than half of all renters in Boston are considered “cost burdened,” meaning they spend more than 30% of their income on rent. Submarkets such as Dorchester, that have lower rental rates than those in the inner-ring and easy access to downtown Boston, will increasingly appeal to many young professionals and families as an alternative to the rental growth of the inner-ring submarkets.

In Boston, over the past 20 years, wage growth has significantly lagged the growth of home prices, making many of the submarkets unaffordable to the general population looking to purchase a home. Additionally, within a 5-mile radius of the Properties, population growth has exceeded 6% for the past five years with this trend expected to continue through the next five years as well.

The Dorchester submarket, in particular, is largely a renters market as the median home sales have risen to $385,000 over the last five years. Renter-occupied housing constitutes over 65% of the housing stock within five miles of the Properties and the supply/demand imbalance will continue, positioning Dorchester for outsized rent growth in the future.

Boston Multi-Family Overview

In terms of multi-family sales volume, Boston ranks as one of the top three markets in the U.S.. with total transaction volume for 2015 expected to exceed $2 billion. In recent years Boston has also seen consistent rent growth with rents currently 23% higher than their previous peak in 2006. In 2015 average rents increased 1.9% to $1,780 per month and occupancy remains strong at 95% throughout the market. 

Boston’s economic growth is mainly driven by education, technology and life sciences; in recent years over 25,000 office jobs have been brought to the market by these three sectors alone. Financial and legal services also added 4,500 jobs in 2015, and many pharmaceutical companies that have been consolidating operations in other parts of the U.S.. are choosing to expand their presence in Boston.

With increasing rents, low interest rates, and excellent access to amenities, highways and transit, the Boston market remains highly desirable for multi-family investment.

Greater Boston

Greater Boston also ranks among the nation’s strongest multi-family markets with demand continually exceeding supply. This is largely due to a lack of available land, slow permitting timeframes and restrictive development policies. The region is expected to continue to strengthen its position among the country’s top real estate markets due to its low unemployment, highly educated workforce and booming local economy. 

One - Bedroom Rental Comps

Address Year Built Occupancy SF Rent Rent / SF Parking Tenant Utility Cost
48 Coffey Street 5A, Boston, MA 1968 100% 400 $1,300 $3.25 Included  All but Heat
86 Savin Hill Ave #1, Boston, MA 1905 100% 436 $1,200 $2.75 None All
135 Neponset St #4, Boston, MA 1965 100% 618 $1,450 $2.35 Included  All but Heat
5 Linda Lane #1-4, Boston, MA 1965 100% 650 $1,600 $2.46 Included  All
1111-1115 Blue Hill Ave #B1, Boston, MA 1920 100% 663 $1,500 $2.26 None All
Averages     481 $1,145 $2.38    
Subject Properties 1985 100% 600 $966 $1.61 Currently Included Heat/Electric
Delta     24.73% -15.64% -32.37%    

Two - Bedroom Rental Comps

Address Year Built Occupancy SF Rent Rent / SF Parking Tenant Utility Cost
1185 Adams St #1, Boston, MA 1960 100% 715 $1,600 $2.24 None All
714 Adams St #6, Boston, MA 1901 100% 778 $1,500 $1.93 None All
22 Branchfield #3B, Boston, MA 1970 100% 875 $1,650 $1.89 None All
Averages     789 $1,583 $2.01    
Subject Properties 1985 100% 800 $1,279 $1.60 Currently Included Heat/Electric
Delta     1.35% -19.22% -20.30%    

Sale Comps

Property Subject Portfolio 119 W Wyoming St, Melrose, MA 1980 Dorchester Av, Dorchester, MA 116 Homestead St, Dorchester, MA 86 Harvard Ave, Chelsea, MA Spring Street Apartments, West Roxbury, MA 4-10 Hartwell Ave, Dorchester, MA
Sale Date Nov-15 Jan-15 Mar-15 Apr-15 Under Contract Under Contract Under Contract
Purchase Price $6,525,000 $6,600,000 $2,000,000 $2,100,000 $5,300,000 $9,100,000 $2,400,000
Type Generational Generational Generational Generational Generational Generational Generational
Year Built 1968 1928 1920 1940 1,970 $1,968.00 $1,899
# of Units 49 36 12 13 35 55 17
Price / Unit $133,163 $183,333 $166,667 $161,538 $151,429 $165,455 $141,176
Estimated NOI $373,000 $328,000 $106,700 $116,735 $301,800 $406,923 N/A
Estimated Cap Rate 6.0% 5.0% 5.0% 6.0% 6.0% 4.0% N/A
# of Parking Spaces 40 36 None 10 40 $40.00 $40
Class B/C B C B C C C

Management

ARX Urban Capital

Arx Urban Capital is an innovative investment firm focused on acquiring generational real estate across supply-constrained markets benefiting from urban growth.  Arx Urban uses progressive strategies to source and operate its assets—technology, sustainability and community resources are utilized to unlock additional value for investors. Since inception, Arx Urban has closed or put under contract 13 deals totaling over $45M in urban retail, apartment and mixed-use assets throughout the Northeast.  The Arx Urban Capital principals have completed over $215M in principal acquisitions over the past 3 years.  Backed by several family investment offices and private equity groups in Boston and New York, the firm continues to seek generational value-add and core plus multifamily, student-housing, office and retail assets that fit their investment platform.


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