Stabilized Multifamily in Naples, FL with Conversion Upside
Deal Overview
Total Raise
$8.55M
Minimum Investment
$100K
Hold Period
3-5 Years
LP IRR
22.2%
Jade at Olde Naples is a 104-unit multifamily community in Naples, FL, offering a stabilized investment opportunity with upside potential. This well-maintained property is located in Naples, FL, ranked #1 for the 2024-2025 best places to live by US News and World Report and benefits from high barriers to entry for new housing. The investment strategy includes bringing rents to market rate, making operational improvements, and potentially converting 47 units to condominiums to enhance returns. With its prime location near downtown Naples, strong market fundamentals, and experienced management team, Jade at Olde Naples presents a compelling investment case.
Executive Summary
Jade at Olde Naples is a 104-unit multifamily community located in the heart of Naples, Florida. This well-maintained property offers a stabilized investment with significant upside potential through rent increases, operational improvements, and a potential condominium conversion strategy. The property benefits from a strong location, high barriers to entry for new development in the area, and a comprehensive renovation program completed by the previous owner. This investment is managed by Tidegate Capital, an experienced real estate investment firm.
Investment Highlights
- Irreplaceable Location: Situated in Olde Naples, near downtown, beaches, and major employment centers.
- Stabilized Investment with Upside: Below-market rents and operational efficiencies provide immediate cash flow with potential for significant increases.
- Value-Add Potential: Recent capital expenditures of $4.4 million, with an additional $1 million planned, will enhance property value and attract higher-quality tenants.
- Potential Condo Conversion: Opportunity to convert up to 47 units to condominiums, offering substantial upside based on comparable sales.
- Strong Market Fundamentals: Naples is experiencing rapid population growth, high demand for housing, and significant barriers to entry for new development.
- Experienced Management: Tidegate Capital brings expertise in multifamily property management and a proven track record of successful investments.
- Cash Flow: After stabilization period, cash flows should increase to 10% until sale, which is expected prior to year 5.
- Tax Benefits: Schedule K-1 reflects depreciation and interest write-offs, resulting in potential reduction of taxable income (your individual tax situation may be different).
Meet the Team
Tidegate Capital is a real estate investment firm with a proven track record of success in the multifamily sector. The firm's principals bring decades of experience in property management, asset management, acquisitions, development, and finance.
Tidegate Capital is committed to delivering superior returns to its investors through a disciplined investment approach, hands-on management, and a focus on creating value.
In addition, Tidegate Capital is guided by the expertise of five advisors, each with extensive experience in business management, start-ups, investments and technology.
Colin P. O'Keeffe, MBA
Principal and Founder
Over 25 years of real estate experience, including asset management of over 8,000 multifamily units.
Guy C. Holbrook, IV, CFA
Principal and Founder
30 years of experience in investment management, portfolio construction, and risk analysis.
C. Warren Skillman
Partner and Managing Director
26 years of experience in portfolio management and equity analysis.
Property Details
- Address: 330 11th Street N and 1015 2nd Ave N, Naples, FL 34102
- Units: 104 (67 one-bedroom, 37 two-bedroom)
- Buildings: 9 two-story, concrete block construction
- Year Built: 1971, extensively renovated 2015, 2018, and 2022
- Roofs: New hurricane code roofs installed in 2018
- Average Unit Size: Approximately 625 sq ft
- Parking: 1 space per unit with ability to charge for additional spaces
- Amenities: 2 public parks and recreation facilities across the street, including pool, basketball courts, kayak ramp, tennis court, and picnic tables (free to Naples residents). Additional $1mm of CapEx planned for improved amenity package.
Business Plan
Tidegate Capital's business plan for Jade at Olde Naples focuses on maximizing value through a multi-faceted approach:
- Increase Rents to Market: Implement a proactive leasing strategy to bring rents in line with comparable properties in the area, capitalizing on the strong demand for well-located housing in Naples.
- Operational Efficiencies: Streamline property management processes, leverage economies of scale, and implement cost-saving measures to improve net operating income.
- Value-Add CapEx: Invest an additional $1 million in targeted capital expenditures to further enhance the property's appeal, including upgrades to common areas, landscaping, and unit interiors. Focus on improving the amenity package to attract a higher quality tenant base.
- Condominium Conversion (Optionality): Evaluate the feasibility of converting up to 47 units into condominiums after a 18-24 month hold period. This strategy offers significant upside potential based on the strong demand for ownership opportunities in Olde Naples and the substantial price premium for condominiums compared to apartments.
- Refinance: Explore refinancing options in year 2 to return a portion of investor capital and improve overall returns.
- Hold Period: Target a 3-5 year hold period, with the flexibility to adjust based on market conditions and the progress of the condominium conversion strategy.
Market Analysis
Naples, Florida, is a highly desirable market characterized by strong demographics, robust economic growth, and significant barriers to entry for new development. Key market highlights include:
- Population Growth: Naples is one of the fastest-growing cities in Florida, attracting affluent residents and retirees.
- High Household Income: The average household income within a 3-mile radius of the property is $175,000.
- Strong Employment: Major employers in the area include NCH Healthcare System, Naples Airport, Arthrex Medical, and a growing number of technology and business services companies.
- Limited Housing Supply: High land costs, development restrictions, and a focus on luxury development have created a shortage of workforce housing.
- Tourism and Recreation: Naples is a renowned tourist destination, with world-class beaches, golf courses, shopping, and dining, further driving demand for housing.
- Excellent Schools: Collier County boasts an A-rated school system, attracting families to the area.
- Walkability: Having a high Walk Score, and proximity to downtown Naples and employment centers gives Jade at Olde Naples a competitive edge.
Financial Projections
Note: The following projections are based on the information provided in the document and are subject to change. They do not include the potential impact of the condo conversion strategy.
- Acquisition Price: $21,250,000 (re-negotiated from $22,750,000)
- Total CapEx: $5.4 million ($4.4 million already completed, $1 million additional planned)
- Projected Stabilized NOI: Based on rent increases and operational efficiencies (Detailed in pro-forma)
- Targeted Sale: Year 3-5
- Potential Refinance: Year 2, returning a portion of investor capital
- Projected Returns: 22.2% LP IRR with Apartment, 31.9% with Condominium Conversion.
Detailed financial projections, including sensitivity analyses, are available upon request.
Location Highlights
Jade at Olde Naples enjoys an exceptional location in one of Naples' most desirable neighborhoods:
- Proximity to Downtown: A short distance from the vibrant downtown area, offering residents easy access to shopping, dining, entertainment, and cultural attractions.
- Walkability: The property boasts a high Walk Score, making it convenient for residents to access amenities and employment centers without relying on a car.
- Beach Access: Located just 1 mile from the renowned Naples beaches on the Gulf of Mexico.
- Parks and Recreation: Two public parks and recreation facilities are located across the street, providing access to a pool, basketball courts, kayak ramp, tennis court, and picnic tables. Also, immediately across the street is a full service pet park.
- Waterfront Park Expansion: The $50M expansion of Waterfront Park will connect to Liminal's front door via a pedestrian bridge.
- Transportation: Convenient access to major thoroughfares, including US 41 and the future I-75, as well as the Naples Municipal Airport.
- Design District: Situated near the vibrant Design District of Naples, offering a unique blend of urban living and natural beauty, known for its unique blend of creativity, culture, and commerce.
Condo Conversion Potential
The potential to convert up to 47 units at Jade at Olde Naples into condominiums presents a significant upside opportunity. This strategy is supported by the following factors:
- Strong Demand for Ownership: Naples has a high demand for condominiums, particularly in desirable locations like Olde Naples.
- Limited Supply: The inventory of available condominiums in the area is limited, creating a favorable market for sellers.
- Price Premium: Comparable condominium sales in the area indicate a substantial price premium over per unit apartment values. Jade at Olde Naples will have a basis going in of $204,000 per door, representing a discount of 48% to similar condominiums in the area.
- Projected Returns: Based on conservative estimates, a condominium conversion could yield a 31.9% IRR compared to 22.2% IRR for continued apartment rentals. This translates to a 9.7% increase.
Tidegate Capital will evaluate the feasibility of the condominium conversion strategy after an 18-24 month hold period, taking into account market conditions and the property's performance.
Projected Condominium Sale Revenue:
- 47 Units to be sold at approximately $415,000 each: $19,545,000
Sources and Uses
| Sources | Amount | % |
|---|---|---|
| Equity | $8,551,175 | 34.5% |
| Debt | $16,256,250 | 65.5% |
| Total Sources | $24,807,425 | 100.0% |
| Uses | Amount | % |
|---|---|---|
| Purchase Price | $21,250,000 | 85.7% |
| Closing Costs | $750,125 | 3.0% |
| Acquisition Fee | $425,000 | 1.7% |
| CapEx & Reserves | $2,382,300 | 9.6% |
| Total Uses | $24,807,425 | 100.0% |
Track Record
Tidegate Capital has a proven track record of successfully acquiring, managing, and selling multifamily properties, consistently exceeding projected returns for investors.
Somerset Place Apartments and Commercial Space – SOLD
Acquisition Date: May 2020
Sale Date: May 2022
Project Overview:
Somerset Place Apartments is a multifamily and mixed-use commercial property featuring 37 units across 36,153 square feet. Our original projection of an 18% IRR was exceeded, delivering an impressive 20% IRR.
Key Features:
- 32 former student housing units located above a first floor suite of classrooms and libraries which were converted into high-demand apartments.
- Each unit includes two bedrooms, each with an en-suite master bath, as well as in-unit full-sized washers and dryers.
- 29 enclosed garage and storage spaces.
- Up to five commercial spaces suitable for one or multiple tenants.
Performance Highlights:
- Offsetting a slightly longer-than-expected lease-up period, rental rates outperformed projections.
- Conservative pro forma with no revenue assumed from the vacant lot and only from commercial spaces.
- Strong total returns aligned with investor expectations.
Vinoy Park Apartments at Beach Drive – SOLD
Acquisition Date: December 2017
Sale Date: February 2022
Project Overview:
Vinoy Park Apartments is a 33-unit multifamily property spanning 16,768 square feet, strategically located in the heart of downtown St. Petersburg. Tidegate Capital projected an IRR of 15.8% and surpassed it, achieving a 17% IRR.
Key Features:
- Prime location in a high-demand area.
- Acquired from non-specialist operators who poorly managed the asset, presenting an opportunity for value-add improvements.
- Significant deferred maintenance, including city-mandated updates such as a new fire escape and upgraded sprinkler systems.
Performance Highlights:
- Despite additional maintenance expenses, rental income consistently exceeded expectations.
- Capitalized on the property’s development potential and implemented effective management strategies to drive value.
Mainsail Apartments – SOLD
Acquisition Date: February 2016
Sale Date: June 2018
Project Overview:
Mainsail Apartments is a boutique 16-unit multifamily property covering 13,700 square feet. Tidegate projected a 16% IRR and delivered an 18% IRR.
Key Features:
- Comprehensive unit renovation and re-tenanting plan initiated immediately after acquisition.
- High-quality improvements enhanced tenant appeal and retention.
Performance Highlights:
- Rent increases at turnover averaged 14%, demonstrating strong demand.
- Achieved pro forma monthly rent target by month 16, ahead of schedule, even factoring in a property management change in the first year.
- Rents for renovated units were above projections due to an expanding resident base in the area.
Why Invest?
Jade at Olde Naples presents a compelling investment opportunity due to the following factors:
- Stabilized Asset with Upside: The property offers immediate cash flow from in-place rents, with significant potential for rent growth and value appreciation through operational improvements and the potential condo conversion.
- Strong Location: Situated in a highly desirable area with limited competition and high barriers to entry.
- Proven Business Plan: Tidegate Capital's strategy of increasing rents to market, implementing operational efficiencies, and executing a value-add CapEx program is designed to maximize returns.
- Experienced Management Team: Tidegate Capital brings a wealth of experience and a proven track record in multifamily real estate investment and management.
- Favorable Market Dynamics: Naples is experiencing strong population growth, job creation, and increasing demand for housing.
- Unique Opportunity: The potential for condo conversion provides a rare opportunity to capitalize on the strong demand for ownership in Olde Naples.
Invest in Stabilized Multifamily in Naples, FL with Conversion Upside
Total raise
$8.55M
Min Investment
$100K
Hold time
3-5 Years
LP IRR
22.2%
↓ More details available to qualified investors ↓
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