Phased Forward Sale Success
Case Study: Single-Family Rental & Build-to-Rent
Property Info
Property Info
Property Objectives
A prominent regional homebuilder sought to enter the build-to-rent market to boost sales volume and mitigate risks associated with potential downturns in the for-sale residential market. However, as a homebuilder, they did not have the infrastructure to operate rental communities.
Selling a property that has yet to be developed poses significant challenges, including the need to project future performance. This becomes even more complex in the absence of directly comparable assets.
Berkadia Solution
To ensure investor confidence in underwriting a yet-to-be-developed asset and to facilitate a transaction that allows the seller to avoid managing an asset they may not be equipped to handle, Berkadia provided the following solutions:
- Commissioned a reputable third-party to conduct a rental analysis on single-family rentals, establishing defendable market rent assumptions.
- Sourced operating expense data from publicly traded SFR operators and other deals across our platform to support operating expense estimates.
- Timed the marketing process to align with the completion of the first few units, allowing investors to assess the quality and size of the construction.
- Conducted a structured bidding process to maximize value and negotiated a “forward takeout” agreement, enabling the buyer to close on homes as they are delivered in phases.
Client Results
By leaning on data from various sources and proactively addressing potential investor concerns, Berkadia was able to create a competitive bidding environment which produced multiple offers with pricing agreeable to the Seller. Structuring a forward sale and a phased closing alleviated the seller’s burden of having to operate / lease up the Property.
Investment Sales
Berkadia Single-Family Rental & Build-to-Rent
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Apartments
Berkadia is dedicated to leading the digital transformation of commercial real estate with investments in technology like Esusu, a rent-reporting platform created to build tenants’ credit. Multifamily property owners who implement Esusu can decrease evictions and vacancies and maximize NOI. As partners, Berkadia borrowers may receive closing cost credits and discounted rates.
551 W PRENTICE AVE
As Freddie Mac’s #1 Optigo® Lender and Fannie Mae’s #2 DUS Producer, Berkadia Small Loans is skilled in navigating GSE programs to find the best loan executions for our clients. Though the lending landscape continues to evolve, agency small loan executions remain one of the best options for investors who recognize the value of optionality and take advantage of rate locking.
Credit facility executions allow borrowers to arrange flexible financing terms for a portfolio of properties on a cross-collateralized and cross-defaulted basis, with property addition, property release, property substitution, and borrow-up capabilities for all asset classes. Kairos Investment Management Company and Berkadia secured a $175 million credit facility backed by Fannie Mae.
We recently partnered with Freddie Mac and Spira Equity Partners to help rehabilitate and preserve 392 units of affordable housing for the residents of Brittany Bay Apartments. Brittany Bay has the most units of any community in a High Opportunity Area that Freddie Mac has financed.
The Fairfield Affordable Housing Preservation Fund is focused on acquiring rent and income-regulated affordable housing assets in markets throughout the U.S. The Fund is Fairfield’s first affordable housing-focused investment vehicle open to third party investors and will leverage Fairfield’s 20-year history of investing and managing LIHTC multifamily assets.
A lot with a vacant commercial building that’s fallen into disuse has been transformed into new housing for Los Angeles’ homeless community by development company and Berkadia partner, Aedis Real Estate Group. Berkadia originated $50 million in Freddie Mac’s TEL forward commitments that will finance Hope at Avalon, as well as two sister projects Hope on Broadway and Hope on Hyde Park.
JASA is a longtime Berkadia client and non-profit organization committed to the safety, health, and well-being of seniors. Recently, Berkadia financed $46M+ in loans for two JASA properties under the HUD 223(f) program. In addition to repairs and upgrades, the higher leveraged, low interest rate loans enabled JASA to allocate funds to programs benefiting their residents.
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