Crestmark is a 334-unit garden-style apartment community built in two phases (1993 & 1997) located in Lithia Springs, within the City of Douglasville, Douglas County, GA. Mesa purchased Crestmark in August 2014 from New York-based Related Companies (“Related”), a leading global investment management firm, for $22,600,000 ($67,365 per unit). Related acquired the asset as part of a 5-property portfolio out of foreclosure in partnership with Fannie Mae in July 2011. The partnership stabilized the Property by increasing occupancy, collections and investing over $1.25 million in capital improvements and deferred maintenance in preparation for sale. However, Crestmark and the other portfolio assets were not a traditional fit within Related’s portfolio and had been self-managed by a newly formed property management entity inexperienced in this type of product and vintage. Mesa believed Crestmark to be a great fit for a value-add investment strategy, and an attractive opportunity to acquire a 1990’s vintage asset for a substantial discount to replacement cost.
Upon acquisition, Mesa successfully executed its plan to overhaul operations, increase collections, and achieve significant rent growth well-ahead of schedule. Mesa completed its $1.55 million capital investment program, which transformed the Property’s aesthetic appearance, upgraded community amenities, cured deferred maintenance, replaced roofs, implemented a low-flow water program and captured impressive rent premiums through unit renovations.
At time of sale, Mesa renovated 68 units at an average cost of $5,800 per unit, and has achieved average rent premiums of $160 per month over pre-renovated units – a 33.1% annual return on cost per renovated unit. By June 2016, Mesa had increased monthly income collections by 16.1% from acquisition in September 2014.
Crestmark was sold in August 2016 for $29,058,000 ($87,000/unit). The investment resulted in a 35.2% project IRR and 1.62x equity multiple over 24 months.
- Investment Type: Value Add Acquisition
- Units: 334 | Average Unit Size: 1,079 sf
- Unit Mix: 1-BD (61%) | 2-BD (34%) | 3-BD (6%)
- Rentable Square Feet: 360,284 sf
- Status: Sold
- Investment Date: August 2014 | Disposition Date: August 2016
- Total Project Cost: $24,980,522 – $74,792/Unit
- Disposition Price: $29,058,000 – $87,000/Unit
- Project IRR: 35.2% | Equity Multiple: 1.62x
- Hold Period: 24 months