Name of property: Avana Skyway
Location: San Jose, Calif.
Owner/operator: Greystar Real Estate Partners
Cost of renovations: $5.1 million ($3.6 million for value-add; $1.5 million for deferred maintenance)
Investment per unit: $8,776
Rent increase per unit: $237
Rents after renovation: $1,924 per unit
Pre-rehab occupancy: 91.5% – 92.0%
Post-rehab occupancy: 94.0%
Targeted ROI: Underwritten: 25.6%; actual: 32.5%
Wes Fuller knew there was a lot of work to do at the Avana Skyway apartments in San Jose, Calif., when Greystar Real Estate Partners bought the property in late 2012.
Less than two years later, the Charleston, S.C.–based company’s renovation team is less than halfway through renovating the 348-unit property, according to Fuller, Greystar’s executive managing director of investments.
The entire project, which will cost about $5 million, is a combination of deferred maintenance and upgrades to make the community look more appealing to prospective renters. However, once the renovations began in January 2013, existing residents began to share in the excitement.
“We have storyboards for residents, to show them what the new units will look like and show them what the new common areas will be like,” Fuller says. “We have a lot of residents moving from unrenovated units to renovated units as a result.”
The company is renovating based on turnovers and limits the number of units being upgraded so occupancy doesn’t suffer. The property, which was built in the ’90s, had never been renovated before, Fuller says.
“We saw a great opportunity to upgrade the common areas and create some new common areas and do complete interior renovations of kitchens, baths, and flooring,” Fuller says.