CASE STUDY: REGAL CANYON APARTMENTS
- Purchased property from bankrupt developer in 2010
- Acquisition included undeveloped land on the site
Investment Strategy and Process
- Increase rents through improved aesthetics, marketing, and property visibility
- Harness demand from surrounding economic development activity, including development of a new school and relocation of municipal offices to adjacent buildings
- Initiate development on excess land parcel
- Hire best-in-market outside property manager (previous owner had inadequately self-managed the property)
- Leverage the property with fixed-rate debt from Fannie Mae
- Sold in 2012 to real estate syndicator who planned additional development on excess land
- Projected returns for new unit construction did not, in AHC’s judgment, justify the development risk, so AHC sold the opportunity to the highest bidder and booked a substantial profit
Regal Canyon is an excellent example of focused strategy, rigorous asset management and disciplined hold/sell analysis.
Our impeccable reputation and industry contacts positioned AHC to be a reliable back-up buyer when the initial high bidder failed to perform. AHC increased rental revenue and net income by 15% and 30%, respectively, over the 18-month hold period. Our development experience and expertise allowed us to initiate the development process on excess land (municipal entitlements, conceptual drawings) and extract additional value at disposition.