Phased Forward Sale Success
Case Study: Single-Family Rental & Build-to-Rent
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Property Info
Property Objectives
A prominent regional homebuilder sought to enter the build-to-rent market to boost sales volume and mitigate risks associated with potential downturns in the for-sale residential market. However, as a homebuilder, they did not have the infrastructure to operate rental communities.
Selling a property that has yet to be developed poses significant challenges, including the need to project future performance. This becomes even more complex in the absence of directly comparable assets.
Berkadia Solution
To ensure investor confidence in underwriting a yet-to-be-developed asset and to facilitate a transaction that allows the seller to avoid managing an asset they may not be equipped to handle, Berkadia provided the following solutions:
- Commissioned a reputable third-party to conduct a rental analysis on single-family rentals, establishing defendable market rent assumptions.
- Sourced operating expense data from publicly traded SFR operators and other deals across our platform to support operating expense estimates.
- Timed the marketing process to align with the completion of the first few units, allowing investors to assess the quality and size of the construction.
- Conducted a structured bidding process to maximize value and negotiated a “forward takeout” agreement, enabling the buyer to close on homes as they are delivered in phases.
Client Results
By leaning on data from various sources and proactively addressing potential investor concerns, Berkadia was able to create a competitive bidding environment which produced multiple offers with pricing agreeable to the Seller. Structuring a forward sale and a phased closing alleviated the seller’s burden of having to operate / lease up the Property.
Investment Sales
Berkadia Single-Family Rental & Build-to-Rent
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Berkadia is dedicated to leading the digital transformation of commercial real estate with investments in technology like Esusu, a rent-reporting platform created to build tenants’ credit. Multifamily property owners who implement Esusu can decrease evictions and vacancies and maximize NOI. As partners, Berkadia borrowers may receive closing cost credits and discounted rates.
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