Your most asked questions:
How do the planned "Quartz" and "Full" unit finishes compare to the current market?
The previous owner upgraded approximately 25% of the units. Knightvest will mimic the scope of the previous upgrades for their "Full" unit finishes (25% of units) with new flooring, paint, appliances, and cabinet doors. The "Quartz" unit finishes (30% of units) are similar to brand new construction in the market, thanks to Knightvest's in-house design team. These higher end, premium units will include quartz countertops with undermount sinks, custom kitchen backsplash, fixture upgrades, tile tub surround, wood-style flooring, six inch baseboards, and stainless steel appliances.
What has been the historical occupancy and how does Knightvest plan to stabilize Arya Grove?
Historical occupancy has ranged from 87% to 95%, and the average for the past two years is ~90%. In its current state, prior to any planned Knightvest renovations, the property is an inferior option to surrounding assets in the area. Knightvest has a long history in the submarket, and they have owned the Cayman, another multifamily asset a few miles away from Arya Grove, since 2018. They've been consistently over 94% occupancy at that property, and are confident in their ability to stabilize Arya Grove at a conservative 92% after unit upgrades. Additionally, they believe that a considerable part of the “value add” they can bring to Arya Grove is a refresh to the management staff.
With the Federal Reserve signaling continued rate cuts, how may the fixed-rate financing help provide a positive boost for this deal?
There are two key potential positives from the current fixed rate terms: possible reduced risk and optionality. First, Knightvest is intending to assume a loan that has positive leverage on day one with the current terms, reducing exposure to any potential interest rate volatility. Once the planned renovation is complete (targeting ~18 months into the hold period), Knightvest also has the option to refinance into a new loan if it provides additional value for our investors.
