Real estate investing platform CrowdStreet achieved a 32% internal rate of return and 1.9x equity multiple in 32 months on the $73 million sale of Eden West, a 212-unit multifamily housing property in Tamarac, Florida.
Made up of two four-story apartment buildings and an attached clubhouse, the garden-style community consists of one-, two-, and three-bedroom units ranging in size from 600 to 1,400 square feet. Residents can enjoy a 24-hour fitness center and group exercise room; a heated saltwater pool; a sundeck courtyard with shaded cabanas; a veranda featuring an outdoor kitchen and gas grills; a resident club room and lounge with coworking spaces; a landscaped area with outdoor fitness equipment; ample parking spaces; and electric car charging stations.
On CrowdStreet, 213 investors raised $9.25 million in common equity toward Eden West in March 2021. The joint venture between Cypress Equity Investments and Eden Multifamily constructed, managed, and sold the property ahead of time exceeding pro forma assumptions. CrowdStreet investors received an investment that outperformed projections.
Following the successful sale, MFE tapped Anna-Marie Allander Lieb, senior managing director at CrowdStreet, to learn more about what made Eden West and its sale outperform.
Why do you think the sale of Eden West surpassed expectations?
The initial underwriting assumed conservative rents in line with what had been achieved at comparable during the COVID-19 pandemic. This left room for upside as the market recovered, and the property was able to capitalize on the rent growth experienced through 2021 that led to initial rents at the property far surpassing initial projections coupled with strong leasing that ultimately led to a successful sale of this pre-stabilized asset.
How did CrowdStreet and your development partners navigate the ever-changing market over the 32 months?
This project was not without its challenges; it had to overcome rising interest rates and delays related to critical infrastructure and materials through the development. However, with the experienced stewardship of our partners, Cypress Equities and Eden Multifamily, and transparency with investors, ultimately a great asset was developed that was received well by the market, and we were able to outperform for our investors.
What set it apart from other housing properties in the area?
This was a best-in-class development with numerous community amenities and Class A-quality unit interiors. The successful sale showed that demand in the market exists for newly constructed quality assets such as Eden West.
Are there plans to fund/develop more properties in Florida? Are there other markets of interest?
We are currently taking a selective approach to pursing development opportunities within the multifamily space, given the challenges of identifying viable deals in today’s market environment. However, we remain open to potential opportunities, particularly those that offer a roughly 6%-plus untrended or 6.5%-plus trended yield on cost. Due to anticipated limited new supply, projects that break ground in the current environment may possess significant potential to attract demand. We will continue to explore potential opportunities in Florida, and are also open to exploring other markets that align with our investment criteria.
