5 Cap Launches Investment Program with $60M Buy

The acquisitions are in line with the new national investment venture's strategy to pump more than $1 billion into assets under management, focusing on purchasing and operating value-add residential properties.

Investor 5 Cap Realty, along with affiliate RREIC Advisors, has launched a multi-year national investment program that could exceed $1 billion in assets under management. The companies have entered in a joint venture, along with a private equity fund managed by JMP Group’s asset management division. The new partnership will focus on purchasing and operating value-add residential properties that can undergo extensive renovations and can be leased and managed to create superior risk-adjusted returns. In keeping with the aforementioned strategy, the joint venture closed on its first two acquisitions, two residential communities totaling 446 units. The properties located in Philadelphia and Atlanta traded for almost $60 million.

There are a lot of undermanaged assets in the marketplace. Our team has demonstrated throughout its history that we can identify these assets and reposition them with better management, marketing, and capital improvements. Our plan is to build a billion-dollar multifamily investment platform.  Over the next five years, we are targeting the acquisition of ten properties per year, each with 200-300 units, focusing on the nation’s top 50-60 markets,” David Reiner, managing director of RREIC Advisors, said in prepared remarks.

Summer Chase

The 198-unit community located at 100 Hunsberger Drive in Limerick, Pa., was acquired for $36.3 million from an institutional seller. The property’s unit mix consists of one-, two- and three- floor plans averaging 996 square feet. The community features amenities such as a fitness center, a clubhouse, a business center, a swimming pool and 200 parking stalls. The asset was 91.4 percent occupied as of May 2017, according to Yardi Matrix. The venture also revealed plans to invest $2.5 million in upgrades to the kitchens, bathrooms and to the HVAC system.

Grove Mountain Park

Located at 1900 Glenn Club Drive in Stone Mountain, Ga., the 268-unit community traded for $21.6 million. The 13-building garden-style property offers a mix of studio, one-, two- and three-bedroom floor plans averaging 827 square feet. The community also features waterscape, a fitness center, a playground, a swimming pool and 600 parking stalls. At the time of the deal, the asset was at 99.6 percent occupancy. The venture plans to invest $3.2 million in renovations to the common areas and to the individual units.

Debt financing for the acquisition of both properties was provided by Fannie Mae. 5 Cap’s affiliate Forty Two LLC will be taking over management assignment for all of the venture’s acquisitions.

Images courtesy of Yardi Matrix