Turning Potential into Profit: The Successful Investment Story of The Edge

In the real estate investment realm, our team at TriArc has demonstrated time and time again that a property's potential can often transcend what's initially observed. One such testament to this is our successful venture with the The Edge at Independence Heights,a 111-unit property that was underperforming its potential when we first encountered it.

Property Overview

Constructed in 2015, the Edges panned 4.35 acres with 3 two-story residential buildings. The architecture was modern, featuring hardiboard exteriors and internals composed of copper wiring,PVC piping, and individual electric boilers. Although well-run by the previous owner, it was clear that the property was not fully capitalizing on its potential.

The apartment complex comprised 56one-bedroom units at 592 sqft and 56 two-bedroom units at 890 sqft, yielding an average unit size of 741 sqft. Amenities included two picnic areas, 9ftceilings, two-tone paint, full-size W/D in all units, berber carpet, and arange of appliances. But it was lacking exterior amenities and had an office stationed in a rentable unit, which decreased the unit count to 111.

 Location Advantage

The property's location, nestled on the northern boundary of Independence Heights and west of I-45, allowed it to benefit from significant operational synergies. TriArc already operated a neighboring property, enabling a unified approach to operations, marketing, and reducing costs.

 Value Creation Strategy

TriArc immediately identified opportunities for improvement in the Stuebner Apartments. By enhancing the curb appeal, adding amenities, and improving operations, we projected a rent increase of $70 in year 2. Our key initiatives included:

• Implementing water metering to bill back 100% of water consumption vs. the previous 75%.
• Constructing fenced patios to charge additional fees.
• Redeveloping the occupied office back into arentable unit.
• Adding a dog park and landscaped courtyard.
• Adding smart locks, thermostats, and optional built-in closets for an additional monthly fee.
• Repainting the property to boost its aesthetic appeal.

Our experience from previous properties in the submarket guided us in the renovation and upgrade process.

The Outcome

Our strategy paid off significantly. Within three years, the rents increased by an impressive $173 or 18%. The NOI also saw a robust rise, increasing by $184k or 30%. The property, which initially had room for growth and improvement, transformed into a flourishing community providing high returns for our investors. By the end of the holding period, the investors earned a 19.6% IRR and 1.64 equity multiple.

 Looking Forward

The success of the Edge at Independence Heights demonstrates the potency of our strategic approach. We continue to leverage our experiences and apply the lessons learned to our current and future investments, driving growth and strong returns for our investors. The transformation of the Edge remains a shining testament to TriArc's commitment to extracting the hidden value in our property investments.

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