East Village Construction Complete, Leasing Ahead of Initial Projections
Financing for the costs for East Village have been secured, therefore no new capital is required at the partnership level.
Construction has commenced on East Village with site excavation complete and form foundations nearly complete.
At 19 months since the closing of the initial investment in East Village, Phase 1a is currently 57.2% leased and 54.2% occupied (vs 42.4% leased and 35.0% occupied as of the Q3 2016 report). Initial MOEV pro forma had Phase 1a 45.0% occupied by month 16, putting us approximately 25 units ahead of MOEV pro forma.
Current gross rent at East Village is $1.44/SF with effective rent of $1.34/SF. The effective rent accounts for a 1 month free concession currently being offered on 1 BR units and a one-time $500 concession on 2 BR units. The initial underwriting had gross pro forma rent of $1.37/SF at month 16 of the investment with an effective rent of $1.25/SF after offering a 1 month free initial lease up concession on all units.
Neighboring project, Dry Creek, is considered to be the main competition of East Village, although it is also considered an inferior product. Dry Creek is currently 93% occupied with average effective rent of $1.48/SF (no concessions currently being offered).
According to the CBRE 2nd Half 2016 Cap Rate study, suburban Salt Lake City cap rates on Class A multifamily properties average 4.75% - 5.25%. This supports our pro forma exit cap rate of 6.00%.