RK Properties Sonata Apartments is an investment into a multifamily apartment complex located in North Las Vegas, Nevada. The property was built in 2008 and has a total of 312 units.
- Year 1 Cash Flow 4.80%
- Initial Occupancy 95.00%
- Est. Time Horizon None
- Yr 1. Cap Rate to Investors 4.51%
- Investor Purchase Price $42,050,000
- Total Offering Size $22,800,000
The total loan is for $19,250,000 and is from First Foundation Bank. The term is for a total of 30 years with the first 5 years being interest only. During this IO term the interest rate is fixed at 3.71%. When amortization begins it is on a 30 year schedule. The interest rate during amortization is 2.35% plus 6-month LIBOR with a floor of 3.71% and a ceiling of 9.5%.
- Yr. 1 DSCR 2.54
- Loan-to-Value 45.78%
- Hold Period DSCR 1.99
The loan term is for a total of 30 years, which offers the trust more flexibility to execute a sale for profit. The normal term on a DST loan is 10 years. Comparatively this loan allows for a sale when the trust feels they can maximize value.
NOI growth compounded over the hold period is 5.21% which is considered aggressive.
The cap rate to investors is low (4.5%).
The upfront costs to investors is high (14.76%) which may limit the ability to recoup these costs at the time of sale.
The interest rate has a variable loan which may make the debt more expensive should the rate increase.
The reserves are being placed into two different accounts which makes it confusing as to how these reserves will be used.
Operating Expenses are projected to decrease over 20% compared to the trailing 12 months of operation at the property.