Rancho Cordova, CA (Sacramento MSA)
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Vivo Investments, LLC
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Targeted Hold Period:
158 Apartments Units
Fairway America Management Group IV LLC (“Fairway”) and Vivo Investments, LLC (“Vivo”) (collectively, the “Co-Managers”) intend to acquire a 158-room suburban upscale hotel (the “Property”), currently operating as a DoubleTree Suites in Rancho Cordova, and convert it to 158 apartment units (the “Project”).
Jointly, the Co-Managers have acquired more than 20 projects together as part of an opportunistic strategy to acquire functionally obsolete hotels at an attractive all-in cost basis in undersupplied markets, and then convert them into competitively priced studio, one- or two-bedroom apartments. Once the conversion is complete, the Co-Managers intend to refinance or sell the Property.
- Well-Located to Meet Renter Demand: The Property is located approximately 16 miles from Sacramento (20-minute drive) and a 5-minute walk from the closest metro stop, which provides direct access to Downtown Sacramento.
- Shortage of Affordable Housing: Due to the influx of new residents into the Sacramento region, rents are on the rise and the region’s higher priced suburbs are now near full occupancy. As a result, renter interest is shifting to areas like Rancho Cordova whose vacancy rate rests well below the metro average of 4.2% at 2.9%.1 On top of that, the asking rent growth over the prior 12-month period in the Rancho Cordova multi-family market was 8.6%.1
- Limited Supply of New Inventory: According to CoStar, the only new supply underway is, Rio Del Oro Apartments, which is projected to deliver 160 units mid-2022. This is the first project since Q3 of 2018 and appears to be in response to the outsized demand seen throughout 2020.1 With limited new supply and increasing demand, we feel rents are likely to continue to rise in the area.
- Class A Amenities at a Discounted Price: After visiting the Property, our Co-Manager reports that units appear to be in excellent shape and confirmed that the common areas were recently renovated in 2016. The Property features Class A amenities such as a pool, jacuzzi, outdoor barbecues, fitness center, coworking space, and a clubhouse. We believe we can generate significant demand by offering rents that are on average 19.4% below comparable rental properties while still providing high-quality amenities of similar or superior quality.2
The business strategy is subject to change. There are many risks to participating in this opportunity. See “Risk Factors and Fee Disclosures” in the Offering Memorandum for a discussion of some of these risks, including loss of capital, illiquidity, lack of diversification, and capital call risks. This opportunity is unsuitable for investors who are not prepared to hold their ownership position indefinitely and who cannot afford a complete loss of capital.
1 CoStar Analytics, Rancho Cordova Multifamily Submarket, April 2022
2 CoStar Property Summary Reports – 2330 Vehicle Dr, 3466 Data Dr, 10741 Fair Oaks Blvd, 10680 Coloma Rd – May 2022