Case Studies - San Rafael Apartments

Year Built:
Total Units:
Class:
Purchase Price:

Renovation:

1986
286
C+
$7,850,000
$27,448 /unit
$240,000

San Rafael Apartments
Santa Fe, New Mexico

The transaction was procured through a broker relationship with which Virtu established a track record for acquiring low income tax credit properties.
Income restrictions were expiring in one year – market rate buyers were still wary of assuming tax credit compliance. Purchase was approximately 65% of replacement cost.
Virtu recognized the opportunity to implement a modest renovation and lease the units to the underserved conventional market-rate segment who did not meet the income requirements of the low-income tax credit properties, but could not afford the higher-end conventional properties.

Over 18 months, Virtu completed a renovation on the exteriors and leasing office, and cured various deferred maintenance issues. Modest interior upgrades to the vacant units included floor coverings and appliances.
Rents increased for all unit types in addition to the implementation of a utility reimbursement program. Existing residents, impressed by the quality of management, renewed at levels higher than expected.

The property was purchased in September 2002 for $7,850,000 and sold in August 2004 for $11,900,000.
Cash flow exceeded expectations enabling distributions to investors above the projected preferred return.
The investor IRR of 51% exceeded expectations, and the investors were returned more than 207% of their original equity over the term of the investment.