VIRGINIA BEACH, VA (April 1, 2021) – Croatan Investments (“Croatan”), a multifamily investment manager for private wealth, institutional, and retail capital, closed on a $3.2 million preferred equity investment in Sutter Ranch.1 The asset, a 228-unit garden-style apartment community built in 1995, is located in north Houston.
“Based on Croatan’s deep knowledge of the Houston market, our extensive value-add experience, and our partnership with an experienced local sponsor with an equity investment twice the size of Croatan’s position, we believe that our preferred equity position in this asset will provide an exceptional risk-adjusted return for our investors,” said Paul Van, Chief Executive Officer. “Having closed on preferred equity investments with both Fannie Mae and Freddie Mac, Croatan is well positioned to continue taking advantage of the attractive yields available through preferred equity placements.”
The sponsor is purchasing the asset with a 10-year Freddie Mac senior loan with 4 years of interest only payments. When combined with the senior loan, Croatan’s preferred equity position represents 77.5% loan-to-cost, inclusive of the capital expenditure budget, on a last-dollar basis. The capital budget of $1.95 million includes interior unit renovations, which should result in a modest increase in rents, as well as enhancements to the clubhouse, pool area, access gates, and landscaping. The sponsor has selected a regional property management firm that currently manages over 23,000 units.
1 This does not constitute an offer to sell or the solicitation of any offer to buy securities, nor does it constitute investment advice.