Learn How Our Strategy Delivers Maximum Return On Your Investments

Boardwalk’s strategy is to capitalize on favorable demographics and supply/demand in major metro areas in Texas through the acquisition of Class B and C multifamily assets.

Our objective is to enhance the value of investments through extensive renovations, while maximizing returns to investors and providing residents with an improved quality of living.

We target assets with highly desirable locations in close proximity to large employment centers, major thoroughfares, public transportation access points, public schools, retail centers and grocery stores.

The end result is affordable, high quality properties, in desirable locations, that are acquired at a discount relative to market.

Value creation is achieved by renovating and repositioning these assets to directly compete with newer properties.

Multifamily Assets Are Poised For Increasing Demand

Low Multifamily Construction Starts

New construction for multifamily complexes are near 40 year lows due to more restrictive lending policies for new construction and high replacement cost (cheaper to buy vs build).

 

Declining Home Ownership

Home ownership rates have fallen from 69% in 2004 to a near 20-year low of 64.5% in 4Q14, due to rising home values and stringent underwriting standards. This has increased the demand for rental units.

 

Renting Trends

The Millennial Generation (~85 million U.S. citizens) is larger than the Baby Boomer Generation. With 57% of the population under the age of 34 renting, the renting trend is expected to continue.

 

Increased Class B and C Demand

Class B and C properties have experienced an increased demand in all four major Texas metro cities, as rising rates have pushed renters towards more affordable options.  And as the wage gap and income disparity across the country builds, aggregate demand for Class B and C properties is also expected to increase.

Compelling Economic And Value Trends in Texas

Strong Job Growth

Texas leads the nation in job growth, adding more than 2 million jobs in the last decade (accounting for over one-third of the net jobs gained in the U.S.). Over the past year, Texas added ~400,000 jobs in all ten employment sectors, representing the largest annual increase in nearly 17 years.

 

Low Unemployment Rate

Texas’s unemployment rate has consistently been at or below the national rate for nearly a decade, and as of October 2017 was 3.9% (US = 4.1%).

 

Relative Value

Cap rates across major metros in Texas during 2015 across all multifamily complexes averaged ~6.7% which is ~150bps higher than cap rates across major metros in California or the Northeast U.S.

 

Favorable Long-Term Factors

Texas’s relative affordable cost of living, favorable business climate, and diverse industrial focus (medical, energy, farming, transportation, government, etc) support a strong underlying economy poised for long-term growth.

B/C Class Property Market Is Not Saturated

Limited Competition

Class B/C properties are often undervalued and/or overlooked by buyers due to significant time and resource investment required to reposition. But Boardwalk identifies assets at attractive valuations that experience greater cash-on-cash returns, significant NOI growth and overall capital appreciation.

 

“Low Hanging Fruit” Opportunities

We target assets with absentee ownership, disconnect between owner and property manager, or low-info owners/operators that lack an organized approach. This allows us to quickly realize operational enhancements to get to Best In Class level.

 

Increased Exit Pool

Upgrading properties from Class B/C to Class B+/B targets a greater pool of buyers at exit.

Low Volatility Play

Minimal Volatility In Multifamily Sector

Multifamily properties exhibit greater resilience in maintaining asset values and have experienced lower volatility with market rents and occupancy levels relative to other property types. Even during the last housing crisis (2008-2010), annual occupancy of Class B and C apartments in Texas had a standard deviation of change (roughly 2-3%) compared to 2003 through 2013.

 

Steady Class B/C Demand

Need for these assets exists regardless of economic cycles. In tougher economic climates, Class A- and B+ renters may be forced to trade down to Class B/C multifamily.  Newer/younger entrants to the renting pool also tend to look for value properties. B/C class fills needs in both robust and weak economic cycles.

Assets With Attractive Risk-Adjusted Return

Acquisition of Timely Assets

Investment strategy focuses on acquisition of hard assets with intrinsic collateral and land value at opportunistic prices significantly below replacement cost.

 

Distribution of NOI After Debt

Returns are paid in cash annually based on net operating income (NOI) generated. Most important, NOI is distributed after debt service allowing for a gradual reduction of debt over time.

8-10%

Preferred Return

15-18%

Targeted Net IRR To Investors

150 + units

Target Property Size

$10 MM - $50 MM

Target Deal Size

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