Florentine Apartments

Projected Returns:
In this investment investors ( or limited partners) will be investing in the common equity position of the capital stack. Much like purchasing public common equity shares on the stock market. Common equity investments generally reciveve the highest upside but are the least risk adverse within the capital stack, as debt, subordinate debt, and preferred equity in a traditional capital stack must legally be paid first. It is worth noting however that LP's will be paid before the sponsor ( who is last to be paid in a liquidity event, like a refinance or sale of the asset.

This syndication incentives larger check writers by establishing 3 tiers of investment. Each with their own structure giving bonus incentives via the profit splits and manager catchup.

Note: Its important to not confuse "preferred return" as a cash on cash or dividend return. see Key Terms below for more information.

Investment Tiers

Return Projections by Tier:

100K Investment | 8% preferred return | 70/30 split | *Subject to manager Catch-Up

$250K Investment | 8% preferred return | 80/20 split | *Subject to manager catchup

$500k Investment | 8% preferred return | 80/20 split | * Not Subject to manager catchup

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Investing Simplified - Key Terms

• Syndication: A syndication is when a sponsor gathers money from investors to buy one specific property, instead of putting money into a fund that owns multiple properties. With syndications, investors have a clearer view of the exact property they are investing in. While syndications may carry more risk since there’s no diversification like in a fund, they often have the potential for higher returns because funds spread out the earnings across different properties, which can lower the total return.
• Sponsor - The individual who is the managing member of a real estate project or fund. Typically holds "GP" shares getting paid very last behind limited partner shares in the capital stack.
• Manager Catch-Up -  is when the sponsor (the manager) gets a bigger share of the profits after the investors have received their preferred return. It’s like the sponsor "catching up" on their share of the profits as a reward for making the deal successful. Once the catch-up is complete, the profits are usually split based on the agreed terms between the sponsor and the investors.
• Preffered Return: A preferred return is the percentage of return LP Investors must reach before the indicated sponsor split takes place. In a deal in which the preferred return is 8% and the "waterfall" ( or split) is 80/20. this means the investors must be paid 8% THEN the remaining funds are split 80/20 between investors and sponsors. i.e you invest $100k at an 8% preferred return with an 80/20 waterfall for one year. At the deal level your 100k basis doubles to 200K. The "waterfall" or split between the LP and the sponsor would look like this. 8% or $8,000 in preferred return would be returned to you first NOT subject to the 80/20 split. There would be $92,000 in profit remaining. $92,000 will then be split 80/20. Investor share being $73,600 Sponsor share being $18,400. Thus the total investor return would be 100K orginal basis + $8,000 preferred return + $73,600 on their share of the split = $181,600
• Dividend: A dividend is the actual cash payment distributed to investors typical on a regal schedule.
• Cash on Cash: return measures the percentage of the investor’s cash investment that they receive back in dividend distributions during a specific period, usually annually
• Hurdle Rate : is the maximum return percentage at which the waterfall split changes. For example, in a deal with an 80/20 split and a 14% IRR hurdle to 50/50, investors will receive an 80/20 split until their total return surpasses 14%. Any remaining funds above this threshold will be split 50/50 between the sponsors and the limited partners (LPs).
• Common Equity: ownership stake help by Limited Partner investors. Common Equity typically get paid after debts and preferred equity are satisfied, meaning common equity carries more risk but also has the potential for higher returns if the property performs well.
• Limited Partner: an LP or investor in a deal that holds common equity shares but has no day to day management or responsibility.

Built-in Equity from Day One:

• Purchased at $65,000 per unit, far below market comps of $90,000–$109,000/unit
• Total project cost, including renovations and working capital, is $14.2M, ensuring cost efficiency and upside potential.

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Value-Add Strategy for Growth:

• Planned renovations and upgrades target $147–$282 rent increases per unit, aligning rents with market rates.
• Additional income streams from utility-bill-backs and resident fees further boost revenue.
• Projected 24% reduction in operating expenses enhances profitability.

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Market Fundamentals Support Stability:

• Omaha Market Strength
• 3.1% unemployment and steady rent growth highlight economic stability.
• $10.8B in new developments drive growth and job creation.
• The market maintains a strong occupancy rate of 94.4%, with a corresponding vacancy rate of 5.6% as of Q4 2024
• Mid-market rents attract tenants priced out of luxury units, ensuring resilience during downturns.

Flexible Investment Tiers Reward Larger Commitments:

• Tiered structure allows higher returns for larger investments:
• Premier Tier ($500K+): 20.1% IRR, 2.0x equity multiple.
• Enhanced Tier ($250K+): 18.7% IRR, 1.94x equity multiple.
• Standard Tier ($100K+): 16.7% IRR, 1.84x equity multiple.

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Execution Risks
Renovations must be completed on time to achieve targeted rent increases and stabilize operations. Delays could impact cash flow projections and investor returns.

Geographic Concentration
The focus on Omaha leaves the project vulnerable to local economic fluctuations, although the market fundamentals are currently strong.

Inherent Value Add Risks

Value add projects require singificant management, and are subject to price variation.

This syndication suits investors aiming for solid, risk-mitigated returns around a proven manager. It becomes particularly attractive for those able to invest at higher tiers of $250,000 to $500,000. Overall, it represents a fundamentally sound multifamily deal that could make a strong addition to many investment portfolios.