Acquisition: Fair Oaks

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Fair Oaks Apartments was acquired in April 2013 through a distressed asset sale by a foreign-owned entity. Tom Wilkinson of KET Enterprises brokered the transaction. After the completion of a thorough due diligence and navigating some complex legal and title issues, the asset was acquired in April 2013. At acquisition, asset was effectively 30% occupied, high crime, and extensive code enforcement issues besetting the property. In addition, undercapitalized management and extensive deferred maintenance needs presented further operational challenges.

The Plan

At onset, we focused on repositioning the asset through an aggressive lease up strategy coupled with an extensive physical rehabilitation and improvement program addressing the following areas:

  • Curbside and landscaping
  • Roofing and drainage
  • Site control, fencing and parking lot improvements
  • Exterior carpentry and resurfacing
  • Interior renovations to all units
  • Leasing office and operational improvements
  • Site amenity improvements
  • Repaired all detected life safety issues
  • Cleared all city code deficiencies and brought asset back into complete compliance

In addition, Shahda Investments due diligence uncovered elevated criminal levels, so they contracted Pro-Eye Solutions LLC, installed a IP surveillance system on site. In addition, they employed HPD-authored CPTED(Crime Prevention Through Environmental Deterrence) site design principles in the renovation scope as well as hire effective 3rd management partners, such as CPM, to further minimize malfeasance.

Summary

Upscale product well received by clients, commanding stabilized rental rates 23% higher than pre-acquisition estimates.
Asset stabilized 6 months ahead of schedule at occupancy rate well in excess of pro forma.
Minimal delinquency coupled with high resident retention and SI specific unit design, allow for low re-letting expenses, while keeping rents at market rates.
Currently providing strong cash flows to affiliates and awaiting placement of permanent financing or disposition.

Before

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After

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