Location: Mesa, AZ
Property Type: Multifamily
Number of Units: 269
Acquisition Date: April 11th, 2012
Status: Sold by Gelt, Inc. on April 30th 2014
Waterstone Apartments was acquired by Gelt on April 11th, 2012 from Auction.com for $11,287,500 with a $7,000,000 bridge loan from Archetype Mortgage. Since the winning bidder was required to go non-contingent on $1,000,000 within 24-hours of winning the auction and the property was to be acquired ?as is? with no financing contingency or due diligence, we performed all of our inspections beforehand. We were able to bid aggressively, out bidding competitive suitors while still staying well within the confines of our pricing parameters.
Upon takeover, the property was not in the best shape as it had been starved of capital and badly mismanaged. Occupancy was in the high 70?s and there were 101 non-renovated units. On top of a number of deferred maintenance issues and capital improvements that needed to be made, there were a significant number of non-paying, rowdy and undesirable tenants. Gelt was prepared to ?clean house? and transform the property into a solid, Class B+ asset that would operate at optimal occupancy. We embarked on an exterior repaint, transforming the property from a drab yellow exterior to a color palate that highlighted the architectural details and enhanced the property?s appearance. Painting was just one of many action items that were needed to upgrade the property. Below is a list of other capital improvement and maintenance items Gelt completed upon takeover of Waterstone:
? Repaired all rotting wood elements, bridges and façade
? Applied elastomeric coating to the roofing to extenuate its effective life
? Added all new siding and stucco to the buildings
? Resurfaced the pools and purchased new pool furniture
? Installed lighting for the signage
? Replaced all the asphalt and broken bumper blocks in the parking lot
? Built a dog park
? Added a bike room
? Added state of the art washer and dryers that gave residents the option to pay with credit/debit cards. Laundry progress and vacant machines can be monitored remotely on the internet for timely access to machines
? Built and furnished an attractive model unit for potential residents to see
? Built a beautiful, new gazebo
On an operational level, we evicted all of the non-paying tenants and commenced a rigorous tenant-screening program. We started marketing to local businesses and tenants in the community, in addition to instituting a resident referral program and creating all new signage and collateral material for the property. The onsite management ensured that tenants? needs were being met as they had gone unanswered while the property was under receivership.
Gelt sold the property for $17,125,000 on April 30th, 2014, producing a 60% cumulative return for Gelt investors within a 24-month hold period.