Jacksonville Portfolio
Blake Capital Group is pleased to introduce a compelling investment opportunity: the Jacksonville hotel to multifamily conversion portfolio. This portfolio encompasses three distinct hotel properties, boasting a total of 341 units. Acquired back in Q2 of 2022, the project is nearing completion of its construction phase.
Currently, Blake Capital Group and Elevate Commercial Investment Group are actively seeking new equity partners to support the project until a projected refinance in January 2025. Investors in this opportunity can anticipate numerous benefits, including strategic alignment with the burgeoning Jacksonville market, the potential for cap rate compression amidst an expanding environment, attractive risk-adjusted returns, and the assurance of an experienced co-sponsor team.
Portfolio Highlights
Product-Market Fit
Jacksonville stands out as one of the fastest-growing cities in the United States. According to the US Census Bureau, it achieved the notable ranking of the 6th fastest-growing city between 2021 and 2022.
- This recent influx of population has forced upwards pressure on rental rates, with Class A units in the Jacksonville market yielding rents $2000+.
- This product will cater to workforce housing providing a much needed affordable option to the market.
Cap Rate Compression Play
Through the strategic repositioning of these assets from hotels to multifamily properties, upon their completion, we have the opportunity to sell them as multifamily assets, which typically command significantly lower capitalization rates. Consequently, this will substantially enhance the overall value of these properties.
- According to Marcus and Millichap, hotel properties from the 2000s vintage in the Jacksonville MSA have been transacting at a 7.25% cap rate in 2023. In contrast, properties of the same vintage within the multifamily sector are trading at approximately a 4.7% cap rate.
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Risk Adjusted Returns
New equity investors in the project stand to benefit from the entry point into this project, due to the surpassing of many of the predevelopment risks.
- Sponsorship has already secured rezoning approvals, finalized plans, and obtained all necessary permits. Construction is anticipated to be complete in the next 6 months
- The newly injected equity is set to yield a 15% preferred return and is projected to reclaim 50% of its initial investment during a refinance expected in the first quarter of 2025.
Disclaimer
*This offering is being made under Rule 506(c) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), which permits general solicitation and advertising of the offering. The securities being offered have not been registered under the Securities Act, or any state securities laws, and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and applicable state laws.
The offering is being made only to accredited investors, as defined in Rule 501(a) of Regulation D. Accredited investors are presumed to be able to fend for themselves and bear the economic risk of investment in the securities being offered.
The information contained herein is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Any such offer will be made only by means of a private placement memorandum and related documents. The private placement memorandum will contain complete information about the offering, including the risks associated with investing in the securities.
Investing in the securities being offered involves a high degree of risk, including the possibility of a complete loss of your investment. The securities being offered are speculative and involve substantial risks. The risks include, but are not limited to, the following:
- The real estate market may decline, causing a decrease in the value of the property.
- The property may not generate sufficient income to meet its operating expenses or debt service obligations.
- The property may require significant capital expenditures or maintenance expenses, which could result in a decrease in income or increase in expenses.
- The property may be subject to environmental or other liabilities, which could result in significant costs to remediate or defend against claims.
- The value of the securities may be affected by economic, political, and regulatory developments.
Investors should carefully consider these and other risks before investing in the securities being offered. Investors should also carefully review the private placement memorandum and related documents before investing.
No assurance can be given that any investment in the securities being offered will be profitable or that investors will not lose their entire investment. The securities being offered are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
The information contained herein is subject to change without notice and does not purport to be a complete description of the securities being offered or the risks associated with investing in the securities. Any such offer will be made only to qualified investors by means of a private placement memorandum and related documents, which should be read in their entirety.