Case Study: Copper Palms

Copper Palms is a 206-unit garden style multifamily community built in 1986 and purchased in 2015 directly from the developer who had owned and managed the property since construction.

Metrics

Purchase Price:
$13,900,000

Sales Price:
$59,000,000

Hold Period:
6.5 Years

Year Built:
1986

Total Units:
206

Average Sqft/Unit:
675

Average CoC% During Hold:
12.8%

Annualized Return:
161%

Multiple:
10.5x

The Details

The pride of ownership of this well maintained asset was identified early on by CVG and confirmed through its extensive due diligence that a major capital outlay would not be required during the initial hold period for non-revenue generating capital expenditures such as asphalt and roofs. Instead CVG was able to focus capital on selectively and strategically upgrading units and repositioning the common area amenities by updating the office, fitness center, laundry care facilities and outdoor pool and barbeque areas, all of which were used and appreciated daily by the Copper Palms residents.

While CVG did offer fully renovated apartment units, CVG’s investment thesis was not to fully renovate all of the units, as it did not believe the market or the demographic called for it, but instead to offer a-la-carte renovations to prospective residents who wished to have certain elements of their apartment upgraded (e.g., new flooring, new appliances, new backsplash, new lighting, painted cabinets) and who were willing to pay for the upgraded items or renovations. This strategic renovation strategy allowed CVG to continually update the interior units to remain competitive and achieve higher rents, while also generating an immediate return on capital.

In 2021-2022, with the original hold period expiration approaching, CVG made the strategic decision to sell Copper Palms, rather than refinance. The age of the property, the submarket, the upcoming need for capital (asphalt, roofs), the lack of current amenities desired in today’s market (no washer & dryer connections in unit) combined with the strong investment demand in Phoenix led CVG to its decision to sell Copper Palms and to allow its investors to realize 10.5x on their investment with CVG in Copper Palms.


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