Exciting New Investment with annual 13%+ yield target in Central Alberta
Through wise investing and prudent fiscal management, a very realistic cash-flow 5% yield + 7% to 9% equity, value upside & mortgage paydown target per year is still achievable even in today’s often frothy real estate market and economic climate. We offer an investment formula with a proven track record, and a management team with the right mix of experience and innovative thinking.
Note: the investment below is NOT a guaranteed investment. Please read subscription documents and risk acknowledgement forms carefully. Accredited investors only, or friends, family and close business associates of the director, Thomas Beyer. Not RRSP nor TFSA eligible. Not a guarantee ! Minimum hold periods and minimum subscription amounts apply.
Target 5% cash-flow yield
Target 7-9% equity growth & mortgage paydown
– For a total return target of 12% – 14% per year –
WITH POTENTIAL TO HAVE NO MONEY INVESTED AFTER 5 YEARS
We have put under contract a mobile home park (MHP) in central Alberta. While many are wondering how to participate in today’s frothy Canadian real estate, there are some great value plays in Alberta. Mobile Home Parks provide a number of advantages including:
– Low vacancies
– Reliable cash flow
– Resilience to economic shocks
– Reliable value increase
– Cheap mortgage terms
– Higher CAP rates
– Low repair and maintenance bills as the mobile homes are
owned by the pad renters
– Far better cash flow for the MHP owner(s) .. which could be you !
This mobile home park offers immediate and medium term rental – and thus value – upside. The cash flow roughly out of the gates is 5% on the cash invested, plus mortgage pay down, and value upside potential in time will make this an attractive opportunity, independent of the stock market gyrations.
Alberta has had a lot of negative news during the last two years and therefore has fallen out of favour with investors. However it’s our opinion the real estate market has bottomed as have rents and occupancy as proven by our numerous apartment buildings we own and/or manage. We love a value play and buying when the market is at the bottom of the cycle has served us well as successful real estate investors over the last 18 years.
We are now seeing signs of green shoots everywhere; new hiring, retails sales up, car sales up, new home sales up, and prices beginning to show positive trends.
We believe the time to buy is NOW.
We have conducted an exhaustive search for bargain priced MHPs across Western Canada. While there’s no shortage of availability, most are overpriced in our opinion with 5% or often sub 5% CAP rates. Over $60,000/pad is normal, often priced as redevelopment land. Much like multi-family properties the CAP rates have fallen, while unmotivated sellers with exaggerated price expectations abound.
We own four MHPs thus far within the Prestigious Properties Group and they’re all performing as we anticipated with very low vacancies even through the two to three year recession from 2015 to 2017 Alberta just experienced and, during last year with rent increases again. Our MHPs have performed; in spite of the fact that commercial and multi-family properties have experienced rent decline, and value decline because of higher vacancies due to Alberta’s temporary adverse economic and political circumstances. The recently formed United Conservative Party will likely overturn the economically disastrous NDP from office in May 2019. As such, the time to buy is now, not when substantially positive momentum has already returned to Alberta due to new political leaders and perhaps a much firmer oil pipeline stance to BC to lower the WCS-WTI differential by 2019 or 2020.
We negotiated our deal and secured this MHP under contract, at what we feel is the beginning of a modest economic recovery in Alberta, and have now substantially completed our due diligence. We’ll have immediate cash flow, even before the anticipated rent increases. A well located park with an almost 6.5% going-in CAP rate and value upside is a very rare feat. We believe that in addition to the value added our interest and management will bring, that prices for these properties will soon rise once Alberta has more positive news commentaries, a more pro-business government and slightly higher and/or stable oil prices. This property also provides significant re-zoning potential as it is located at the corner of two major roads, one being proposed to be widened within 2 years.
The anticipated exit strategy & overall strategy of this deal is this: we increase rents twice between now and refinance time in about two years, at which point we estimate that ~35% of your invested cash would be returned to you. We would then apply to rezone the property, assuming the road widening goes ahead as currently planned and budgeted by municipal council, and list the property for sale at a 20-25% premium over the current going-in value, providing tremendous lift on your cash invested. Since we have income, we can be an unmotivated seller. We do not anticipate to be a developer of this land. We intend to only rezone the land to get a higher value, as per our appraisal, then sell while holding with perpetual income.
We’ve learned some things from our $250M+ in real estate transactions across multiple projects over the last 18 years. Specifically, one needs to keep upfront fees and ongoing management fees very low in a muted market to achieve a decent yield. This MHP its structured with a 85/15 split on cash distributions for the Limited Partners and General Partner. It is designed as a tax advantaged long term yield play, with the potential for a short- or medium-term turnaround. We see this split as a win-win structure / deal for all concerned.
A portion of the required equity contribution is currently reserved. We are making the remaining equity available on a first come first served basis to our past and current investors initially. We anticipate that it will be sold out well in advance of our closing date, which is currently mid January 2019. It’s therefore important that Prestigious Properties investors indicate their interest as soon as possible to secure their allocations. Minimum investment $100,000 – for Accredited Investors only.
We’ll be conducting a webinar on Thursday, November 1, 2018 at 6:00pm Mountain Time to review this opportunity and take questions.
This Is Our 8th Multifamily Real Estate Investment Limited Partnership Offering
We have made money for our investors time and time again. And we’ve often exceeded the ROI target that we are using to attract new limited partners like yourself today, namely 5% yield with 6-8% equity growth/mortgage paydown on an annualized basis. We are just being exceedingly cautious in today’s world economic climate in a recovering Alberta market into 2019. Mobile home parks as well as multifamily/apartment building real estate provide reliable cash-flow and low vacancies even in economically uncertain times.
Above Board Philosophy With No Inflated Going-In-Prices
We take great pride in our corporate philosophy of sharing a wealth of information with our investors and being very up front about investment prospects and performance. For instance, unlike many other LP offerings we do not inflate going-in-prices of properties we purchase and as such, the general partners do not make a return on investment until the limited partners do.
How We Historically Have Invested
- Focus on apartment buildings or mobile home parks (MHPs) because this real estate class is less volatile than the stock market or other real estate sectors, while having good upside plus built-in inflation protection. Keep door open to invest up to 25% elsewhere, such as in residential land development, when the price is right. Here’s more on why we choose apartment buildings.
- Look for buildings or MHPs in regional economies that are strong or expected to be strong in coming years, such as Western Canada or select US states such as Texas. This is ALBERTA in 2018 !
- Evaluate buildings or MHPs for sale, sifting through the list over many months to find the best values.
- Purchase selected buildings or parks as good deals are found, typically with 25-30% cash down.
- Increase value of assets through prudent renovations, which support higher rents and resale values.
- Increase value of assets through expert property management, further supporting rents and resale values.
- Use cash flow from renters to maintain the asset and flow excess into the LP as available.
- Allow time for cash flow from rents paid to lower the mortgage debt on each building so that the LP owns more of each, and thereby increasing the value of its original investments outside of the increases in market value of the assets themselves.
- Allow time for local economic growth/in-migration/tightening vacancy rate to increase market value of assets.
- Periodically sell or refinance buildings or MHPs to produce investor profits, and at some point liquidate the LP and its assets for the same reason.
How You Participate
There is a minimum $100,000 investment for accredited investors in our latest investment. The set value of one LP unit is $1,000 and each limited partner will own at least 100 units. Your investment term is a minimum of 10 years, with monthly cash flow and occasional, likely every 5 ears upon re-finance add’l distribution.
This is not designed to be a liquid investment for at least 10 years. it is designed as a perpetual or quasi-perpetual income machine !
If you envision that you need the money before the 10 year exit target, this investment may not be for you. The underlying real estate usually carries a five year mortgage, with early discharge penalties, plus it takes time to raise money and time to sell, plus we plan to re-finance at least once in 5 years, so a 10+ year minimum commitment is expected. The investment is designed as an alternative to the often very volatile stock market, specifically REITs, with a higher return but it is less liquid.
What is an accredited investor ?
Security legislation in Canada allows multiple exemptions to invest into securities such as those offered by our firm. There are mainly five:
- Friend and family of the directors
- Close business associates of the directors
- $10,000 or under investments
- Offering Memorandum (OM) – this is currently unavailable
- Accredited Investors
An accredited investor is someone that
a) has an income (for the last two years) of at least $200,000 or $300,000 with a spouse, or
b) has “financial assets” ie liquid securities or cash of at least $1M [ Please note: this excludes your personal residence and your business, say a dental practice], or
c) has a net worth of at least $5M
Liquidity comes at a premium, namely the securitization of a firm or real estate, through the stock market. Liquidity also causes volatility and pricing frequently removed from real world value. This is not designed to be a liquid investment. If you envision that you need the money before the 10 year exit target, this investment may not be for you. The underlying real estate usually carries a five year mortgage, with early discharge penalties. The investment is designed as an alternative to the often very volatile stock market, specifically REITs, with a higher return but it is less liquid. It is based on REAL assets, where REAL people pay REAL money to us every month to live in REAL apartments with REAL appliances, called income producing real estate, usually apartment buildings.
The exit strategy & overall strategy of this deal, why it is so unique, and why you should definitely consider it now is this: after two years we anticipate the re-finance of the MHP and return ~35% % to you. We then plan to rezone the property as the adjacent road gets widened, as penciled in the current 2 year community plan. We then plan to sell it at a 20-25% premium. We do not envision to be the developer of this property. Again this is a plan, and like any real estate offering this is subject to change and a plan, not a guarantee.
Our Return Objective
A 12-14% average annual ROI over a 3-4 investment with 5% annual cash distribution, and a ~35% return of capita after refinance after about 2 years is our objective for the current MHP opportunity.
Protecting Our Investors & Management Fee Breakdown
General Partners sign all required personal guaranties for mortgages (investors like you are Limited Partners).
Your total liability is limited to your investment.
We take no management fees but we charge a modest acquisition fee and 15% of all distributions. 85% of distributions are distributed to investors. As such, the GP’s goal and the investors’ goals are aligned. The GP is owned by Thomas Beyer. The GP may pay a fee or distribute some of their units to investment finders or co-managers at its discretion.
Some Short Videos
Please note that these videos do not provide investment, tax or financial advice ! These are only opinions. No return is guaranteed. Not every interested party is able to invest. Please contact an Exempt Market Dealer licensed to sell our products for financial advice.
Video 2: Profit Centers in Real Estate
Video 3: Alternative Investing 101
Video 4: Explanation of Target Return
Video 5: Explanation of Cash-Flow
Video 6: Risk of Mortgage Investments