Project name
Integra Isles (FULLY FUNDED)
Location
Initiator
REALIANCE USA B.V.
Local partner
Category
Development of 264 garden-style apartments
Expected investment term
5 years
Exit strategy
Sale to an investor, or hold after restructuring
Total investment
US$ 70,362,600
Bank loan
US$ 51,830,600
Equity Project LP
US$ 18,532,000
Equity in REALIANCE entities
US$ 8,550,000
Structure
Participation directly in one of the REALIANCE entities
Projected gross return
84.9% % over 5 years
Projected gross return
17.0% per year (ROI)
Unique selling points
The growth in demographics and employment in the Orlando metropolitan area, combined with the lack of an affordable alternative to owner-occupied housing, are driving demand for rental housing. Despite the temporary oversupply of new housing, demand continues to grow structurally and, beginning in 2025, demand is expected to once again exceed supply, resulting in rent increases. Thus, Integra Isles will be delivered in 2025 and 2026 under improved market conditions.
Integra Isles is financed with favorable government-related HUD financing. This financing is characterized by a long term of 40 years with a fixed interest rate of 6.14%. Compared to this HUD financing, other development projects typically use traditional construction financing with variable interest rates that are higher. This provides long-term security on financing. In addition, this loan is transferable to a potential buyer, which increases the flexibility and attractiveness of the investment.
With the land contribution, there is a strong local commitment. In addition, the local partner (including the contractor) and the promoter contribute in the present proposition.
The cost of wood has returned to pre-pandemic levels, which has contributed to a reduction in overall construction costs.
Relatively high reserves can be used for any shortfalls during lease-up (years 1 and 2) (US$1.3 mio. reserve for operating shortfall and US$2.1 mio. of working capital). Then, during stabilization (year 3), potential gross rents can fall by 11% and still break even financially, contributing to investment stability.
Despite the relatively high reserves and longer prospective term for a development project (normally four years), a gross return is projected of 17% per year.
For more information you can reach REALIANCE at +31 (0) 20 21 03 180 or invest@realiance.nl.
