Integra Myst

Unique selling points

The rental apartment market has more than proven itself during the corona pandemic. The further reopening of the economy with a strong job growth, results in a significant increase in demand for apartments and in rent increases.

Orlando is one of the fastest growing cities in the southeastern US in demographic and economic terms and has a favorable business climate, partly due to the absence of state tax. The rental apartment market in Orlando has performed very well in recent quarters with an expected rent increase of 12% in 2021.

A visibility and expansion location in the northern sub-market Deltona close to an intersection of the important Interstate-4 and located in the to be developed ‘master plan’ Deltona Village.

The site is conveniently located in relation to the local employment centers such as the Amazon Distribution Center, the Portland Industrial Park as well as a number of hospitals. In addition, it is near employment centers in neighboring Lake Mary (Colonial Town Park, Colonial Center Heathrow and Primera Office Park) as well as other retail and restaurants (Seminole Town Center and Downtown Lake Mary).

The local partner is very experienced as a developer with similar projects with Orlando as both its home and main market. With various development companies, the local partner has developed nearly 25,000 apartments since 1995, usually with ‘double-digit’ returns. In this project, the local partner works together with Highpoint Residential, which shares in the risk and also fulfills the role of ‘property manager’.

The master plan is zoned for both ‘retail’ and ‘residential’. With the addition of a small additional land plot in the master plan, a formal ‘rezoning’ must be obtained. Approval is expected in the coming weeks. Currently, also the last formalities are being discussed with the municipality of Deltona with regard to the ‘site plan’. The condition for closing is that both are completed before the expected closing date of the land on December 15th. Construction of the project will be carried out on the basis of a GMAX contract (fixed price contract) by general contractor LandSouth, with which ILC has successfully developed many projects. There is also a completion and cost guarantee from the local partner.

Favorable financing with Meta Real Estate Partners, whereby a ‘senior’ and a ‘mezzanine’ part leads to a leverage of 75%. The relatively high interest loan of LIBOR (0.25%) + 6.14% is expected to be refinanced at stabilization. If the interest reserve (actual interest rate of 6.9% to absorb possible interest rate increases) turns out to be insufficient, the local partner will take care of a possible operating deficit.

The projected rental income is based on current rents of two recently sold properties in adjacent submarkets, including the REALIANCE project Integra 289 Exchange. Also, the current sales prices are not far below the projected sales price in four years (difference of 10% to 15%).

The local partner ILC invests together with co-General Partner and property manager Highpoint Residential a relatively large amount of US$ 2,252,453 (13.9% of equity). In addition, REALIANCE will participate for US$ 150,000 in the Capital LP.