Properties were acquired for $26,700,000 against an appraised value of $26,900,000 and syndicated at $32,700,000. This structure results in a 5.65% acquisition cap rate and a 4.61% syndicated cap rate.
Valuation ladder
Acquisition price$26.70M
Offering price$32.70M+22.5%
Appraised value$26.90M82.3% of offering
Premium / discount to appraised value
21.56%
Cap rate spread & load
Acquisition cap rate5.65%
Syndicated cap rate4.61%
104 bps of spread between acquisition and syndicated cap rate.
Upfront load (all-equity)9.65%equity = offering price
Load net of reserves4.11%
Acquisition Price
$26,700,000
Offering Price
$32,700,000
Appraised Value
$26,900,000
Upfront Load
$6,000,000
Load on Equity
9.65%
Load on Offering Price
9.65%
Acquisition Cap Rate
5.65%
Syndicated Cap Rate
4.61%
Premium / Discount
21.56%
Appraisal / Offering %
82.26%
Less Reserves %
4.42%
Strengths
- Acquisition price of $26,700,000 is below appraised value of $26,900,000
- Acquisition cap rate of 5.65% based on in-place metrics
- Recently built assets (2018/2019) with limited immediate capex needs
Concerns
- Syndicated cap rate compressed to 4.61%
- Appraisal-to-offering ratio of 82.26%
- Total front-end markup and reserves equal $6,000,000