Tower on Ryan Park is a 141-unit, high-rise multifamily property with tremendous upside potential. The Property is located in the heart of downtown Mobile, Alabama.
Built in 1950, the Property was acquired in January 2018 by affiliates of VCP-Tellus (Mobile), LLC and ArborCrowd.
The business plan is to implement a value-add strategy to reposition Tower on Ryan Park from an underperforming 1950’s vintage-style property to a modern, desirable and quality apartment complex. To execute on this strategy, the Property will undergo a complete renovation of the interiors and exterior.
- The Sponsorship is controlled by Varden Capital Properties, LLC (“VCP”), which is led by Trace McCreary. This Project is VCP’s second offering with ArborCrowd.
- VCP’s first transaction with ArborCrowd, the Southern States Multifamily Portfolio, closed in 2017 and was oversubscribed in five days. VCP delivered an early return of capital to ArborCrowd investors when it sold one of the three properties in the portfolio during the first year of the investment – returning approximately 60% of investors’ initial equity in a year’s time. This occurred while still achieving the same exit price as projected in the second year of the investment.
- McCreary is a seasoned owner/operator who, through VCP, has acquired more than 90 apartment complexes with over 18,500 units – all in the southeast.
The business plan is to implement a value-add strategy to reposition Tower on Ryan Park from an underperforming Class B-minus to a Class B-plus apartment complex.
About $2.25 million ($14,500/unit) will be spent on gut renovating 141 apartments, repurposing ground floor space into 12 new studio units and converting rooftop space into a penthouse apartment.
Over $2 million will be spent to improve the Property’s common areas, exteriors, and public streetscapes.
The Sponsor anticipates this work will be completed in under 24 months.
Low Cost Basis
The Property was acquired at a basis on par with competitive sales, but located downtown, which is a better location.
The low all-in cost basis allows the Sponsor to be more competitive on rent than other nearby properties that cost more to acquire and build.
The Sponsor has identified further potential upside making use of certain local, state and federal tax incentives and subsidy programs, which can offset certain renovation costs.
These programs have extensive limitations and requirements, but if applied for and maximum benefits are obtained, IRRs to investors could potentially exceed 20%.
The Sponsor plans to unlock the immense potential of the Property and capitalize on the following fundamentals, some of which are already in place:
Location: Residents are within a one to ten minute walk to downtown’s largest employers and hottest restaurants. The Property has quick access to all major roads and points of interest in greater Mobile.
Supply: Downtown Mobile is limited in its supply of quality apartments as existing units are either outdated or in disrepair. Tower on Ryan Park is poised to be the only premium apartment building in Mobile’s downtown that can offer high quality living at an attractive price.
Demand: Mobile has benefitted from new jobs brought by Airbus and Austal USA’s significant shipbuilding contracts awarded by the US Navy. With an influx of better paying jobs, more renters are seeking high quality apartments in prime locations that offer top notch amenities such as the Property’s fitness center, roof deck, covered parking and self-storage.