Houston Investment Opportunity - Stone Canyon Apartment Homes - Investment Revenue Realty
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Houston Investment Opportunity
Stone Canyon Apartment Homes
January 27th, 2020Investment Overview
The Western Wealth Capital LIV Limited Partnership and Western Wealth Capital LIV US Investor Limited Partnership
are proud to offer investors an opportunity to invest in a cash-flowing property in one of America’s strongest real estate
markets – Houston, Texas.
The Limited Partnership intends to invest in Stone Canyon Apartment Homes, a 216-
unit garden-style apartment community located in Northwest, Houston, Texas. Built
in 1998, the property offers upside potential, with majority of units still retaining their
original interior fittings. Stone Canyon Apartment Homes offers a convenient location
with immediate access to a number of business parks, lifestyle amenities and
inclusion to the Cypress-Fairbanks school district. The owner of Stone Canyon 133,934 jobs
currently does not allow pets in any units, this provides an opportunity for WWC to within 25-minutes
charge a premium for pet ownership. Allowing pets at Stone Canyon will also increase
the number of eligible residents, as 43% of WWC tenants in Texas are pet owners. Within 25 minutes
of the property:
Business Plan
This involves increasing the net operating income over a five-year period using Western
Wealth Capital’s disciplined and consistent value-add program. The four main drivers
to increase the net operating income are:
x Normalize rents and bring to market average – The current owners are operating
with disparity between rents of like-units across the property. Western Wealth
Capital intends to reduce that disparity using our proven lease management
approach.
x Interior Upgrades: Classic to Goldstar – Western Wealth Capital plans to complete
full interior upgrades to 120 of the untouched units (56%). We have modelled a
projected $125 per month per unit increase in rental income. Most units are
x Washer & Dryer Value-Add Opportunity – Western Wealth Capital has modeled the untouched in their
installation of washers and dryers in 168 units (78%), enabling an increase of $40 original 1990’s
per unit per month of rental income. condition, a great
x Private Backyard Units – A high-demand feature in this sub-market. Stone Canyon opportunity to
Apartment Homes presents the opportunity for WWC to install fenced-in backyards
implement WWC’s
and enhanced patios on 30 ground-floor units (14%) and charge an additional $100
interior upgrades.
per unit per month.
Normalize Rents (Loss to Lease) $240,970 $4,589,902
Interior Upgrades (120 units) $180,000 $3,428,571
Install Washer & Dryer (168 units) $80,640 $1,536,000
Private Backyard Units (30 units) $36,000 $685,714
Total Increase $10,240,187
Purchase Price: $28,550,000 Equity Required: $10,900,000
Gross Income $2,976,268 $3,366,590 $3,656,582 $3,803,210 $3,955,655
Total Expenses ($1,518,140) ($1,577,431) ($1,635,273) ($1,690,397) ($1,747,757)
NOI $1,458,128 $1,789,159 $2,021,309 $2,112,813 $2,207,898
Non-Recurring Expenses ($147,965) ($159,675) ($168,375) ($172,773) ($177,347)
Property Value* $27,773,874 $34,079,223 $38,501,124 $40,244,062 $42,055,206Property Overview
Built in 1998, Stone Canyon Apartment Homes average 894 square feet and deliver spacious one and two-bedroom
suites. Apartments feature resurfaced countertops, monitored alarm systems, ceiling fans, spacious closets, 9’
ceilings, crown molding and private balconies or patios. Select apartments feature built-in bookcases, wood
flooring, tile backsplash, washer/dryers and sunrooms. Community amenities include a resort-style swimming
pool, hot tub, poolside BBQ areas, newly renovated gym (2017), business center, coffee bar and a drive-thru mail
center. The property is conveniently situated near Highway 290 and Highway 6, two major highways that offer a
number of retail opportunities for area residents.
With the great position Stone Canyon Apartment Homes enjoys in Northwest PROPERTY AMENITIES
Houston, there continues to be ample opportunity to add significant value to the
x Swimming Pool
property by implementing the partnership’s value-add program. The previous
x Hot Tub
owner spent significant capital over the past few years to update the building
x Newly Renovated Gym
common areas while only doing some minor touch-ups to the unit interiors. Stone
Canyon is within close proximity of some of the most prestigious shopping and x Fitness Center
master-planned developments in Houston. Northwest Houston had a 23% x Business Center
population increase from 2010 to 2018. This trend is expected to continue in x Coffee Bar
Northwest Houston. x BBQ Grill Areas
x Gated Community
x Covered Parking
Site Overview x Drive-thru Mail Center
Address: 10919 West Rd, INTERIOR FEATURES
Houston, TX 77064 x Ceiling Fans
x Built-in Bookshelves*
Total Units: 216
x Washer/Dryer*
Purchase Price: $28,550,000 x Wood Flooring*
Price Per Unit: $132,176 x Spacious Closets
Year Built: 1998 x 9’ Ceilings
x Crown Molding
x Cloud Light Fixture
x Sunroom
x Private Patio or
Balcony
*Select Units
Classic UnitExxonMobil Campus
(10,000 employees)
19 minutes away
George Bush Airport
(13,804 employees)
24 minutes away
Location Overview
Houston, TX x Stone Canyon's location affords the property a strategic
position off West Rd with immediate access to Highway
290 and Highway 6.
#1
x Highway 290 is an East-West thoroughfare that serves
commuters throughout Northwest Houston. 17
developments are underway surrounding Highway 290
accommodating the large growth seen in this area.
x ExxonMobil’s state of the art campus is 19 minutes from
#3
the property and is a hub for new development. It
accommodates 10,000 employees and provides
significant economic benefits for the local economy.
x The George Bush Airport is the 8th busiest airport in the U.S,
with over 13,000 employees and serves more than 40
#3
million passengers annually. It is conveniently located 25-
minutes from Stone Canyon Apartments.
x Stone Canyon is close to many master-planned
developments including the Willowbrook Mall - 24 minutes
away – a 1.5M sq ft enclosed mall development anchored
by Macy’s, J.C. Penney and Nordstrom Rack.
#4
x Village Center is a new $145M development that will host
a Marriott Hotel, upscale office space and more to be
announced on 43 acres, just 5-minutes from the property.
Major Employers
#1
George Bush Airport 13,804
ExxonMobil 10,000
Hewlett-Packard (HP) 9,000
GE Oil and Gas 4,800
Noble Energy Global 2,330Financial Overview*
Investment Breakdown
Purchase Price $28,550,000
Mortgage ($21,412,500)
Down Payment $7,137,500
Legal & Closing Costs $573,008
General Partner Fees $1,338,625
Deposit Accounts $174,003
Capital Improvements & Reserves $1,676,864
Net Cash Flows Year 1 Year 2 Year 3 Year 4* Year 5
Net Cash Flows $441,565 $817,534 $1,040,984 $714,802 $768,016
Cash Flow % of Equity 4.1% 7.5% 9.6% 6.6% 7.0%
Principal Paydown - - - $365,856 $362,453
Net Cash Flows plus Principal Paydown $441,565 $817,534 $1,040,984 $1,080,658 $1,130,469
In Year 4 the loan changes from interest only to an amortizing loan.
General Partner intends to distribute 80% of annual cashflow.
(all figures US$)
Supplemental Financing Original Equity: $10,900,000
Year 2/3 Year 3/4 Year 4/5
Estimated Proceeds from Refinance $4,508,537 $3,748,079 $1,794,866
3 & 5 Year Investor Worksheet 3 Year Exit 5 Year Exit
Value at Estimated Cap Rate $38,501,124 $42,055,206
Sales Costs + PPP 1% ($346,510) ($378,497)
Loan Repayment ($21,412,500) ($20,684,191)
Net Sales Proceeds $16,742,114 $20,992,518
Cumulative Cash Flow $2,300,084 $3,782,902
LESS: Investor Equity ($10,900,000) ($10,900,000)
LESS: Disposition Fee (5% of appreciation) ($292,106) ($468,210)
Investor Returns Year 3 Year 5
Total Investor Return (65% of Distribution) $5,102,560 $8,714,686
Limited Partner Return on Equity 47% 80%
Limited Partner Annualized Return on Equity 16% 16%Purpose of this document This document is being furnished to you solely for informational purposes in considering an investment in Western Wealth Capital LIV Limited Partnership and Western Wealth Capital LIV US Investor, LP (collectively, the “Partnership”). All information included in this document is current as of the date hereof and is subject to change, completion or amendment without notice. This document does not purport to contain all the information necessary to evaluate an investment in the Partnership, and it is understood that you will make your own independent investigation of the merits and risks of the proposed investment. This document does not constitute an offer to sell, or a solicitation of an offer to buy, an interest in the Partnership. Confidentiality Your receipt of this document constitutes your agreement with the Partnership: (a) to maintain the confidentiality of this document, as well as any supplemental information provided to you by the Partnership or its representatives, either orally or in written form; (b) that any reproduction or distribution of this document, in whole or in part, or disclosure of any of its contents to any other person or its use for any purpose other than to evaluate Partnership is strictly prohibited; and (c) to return promptly to the Partnership this document, as well as other materials that subsequently may be provided to you by and on behalf of the Partnership, if you decide not to proceed with an investigation of the Partnership. Forward-Looking Statements This document includes “forward-looking statements” and “forward-looking information” (collectively, “forward-looking statements”) and “financial outlook” within the meaning of applicable securities laws. All statements other than statements of historical facts included in this document, including, without limitation, statements regarding the future financial position, targeted or projected investment returns, business strategy, budgets and projected costs of the Partnership and plans and objectives of the Partnership for further operations, are forward-looking statements or financial outlook. In addition, forward-looking statements and financial outlook generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “forecasted,” “projected,” “estimate,” “anticipate,” “believe,” or “continue” or the negative usages thereof or variations thereon or similar terms, although not all forward-looking statements or financial outlook contain these identifying words. Forward-looking statements and financial outlook reflect our current expectations and assumptions as of the date of the statements and are subject to a number of known and unknown risks, uncertainties and other factors, including, without limitation, those listed under the heading “Risk Factors” below, many of which are beyond our control, which may cause actual results, performance or achievements to be materially different from any anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Although we believe that the assumptions on which the forward-looking statements are made and the financial outlook is based, including, without limitation, those assumptions listed under heading “Assumptions” below, are reasonable, based on the information available to it on the date such statements were made, no assurances can be given as to whether these assumptions will prove to be correct. Given these uncertainties, readers are cautioned that forward-looking statements and financial outlook contained herein are not guarantees of future performance; accordingly, readers should not place undue reliance on forward-looking statements or financial outlook. To the extent any forward-looking statements in this this document constitute “financial outlook” within the meaning of applicable securities laws, such information is being provided, so that readers are aware of management’s current estimate of future financial performance of the Partnership (which estimates are subject to change). We will not update any forward-looking statements or financial outlook except as, and to the extent, required by applicable securities laws. The forward-looking statements and financial outlook contained herein, and all subsequent written and oral forward-looking statements and financial outlook attributable to the Partnership, or persons acting on any of their behalf, are expressly qualified in their entirety by this cautionary statement. No representation or warranty is made by the Partnership as to the accuracy or completeness of any of the information contained herein. No securities commission or similar regulatory authority has passed on the merits of the securities referred to hereunder and any representation to the contrary is an offence. In considering the prior performance information contained herein, prospective investors should bear in mind that past performance is not necessarily indicative of future results, and there can be no assurance that the Partnership will achieve comparable results. Fees and Expenses Prospective investors are solely responsible for their own fees, costs, and expenses incurred in their investigation of the Partnership, regardless of whether or not a transaction is consummated including without limitation: travel; accounting fees; due diligence costs; legal fees; disbursements; and taxes. Private Placement Terms Issuers: Western Wealth Capital LIV Limited Partnership and Western Wealth Capital LIV US Investor, LP. Minimum Subscription: USD$25,000. USD$ (10,900,000 units at $1.00 per unit)
x Acquisition fee: 2% of the total costs of the acquisition of the identified asset to be paid upon closing of the identified asset. x Asset management fee: 3% of monthly rents. x Asset setup fee: $8,500 paid upon closing the identified asset. x Mortgage guarantee fee: 1% of the amount guaranteed for any acquisition loan, financing or refinancing. x Disposition fee: 5% paid upon liquidation of the identified asset, payable only on the amount of the increase over the purchase price of the identified asset. x Profit sharing as described in the Disposition Waterfall below. The partnership plans to distribute approximately 80% of cash flows annually on November 30 of each calendar year. Capital raising fee paid to individuals or companies who qualify under the relevant securities legislation in an amount up to 5% of the funds raised by such individuals or companies, subject to applicable laws. Any such capital raising fees will be paid upon closing of acquisition of the identified asset. Any possible distributions made by The Partnership will be in the following order: x The Limited Partners will be paid back their initial investment first. x Limited Partners will then be paid 65% of the profit, if any. x The General Partner will then receive 35% of the profit, if any. Assumptions Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward- looking statements and financial outlook contained herein include that: building upgrade plans and related expenses will proceed as anticipated; the Partnership will remain in good standing with respect to its obligations to any senior lenders; the general economy is stable; local real estate conditions are stable; interest rates are relatively stable; equity and debt markets continue to provide access to capital; and that the Partnership’s expenses will not be materially greater than anticipated. These factors and assumptions should be considered carefully by readers. Readers are cautioned not to place undue reliance on the forward-looking statements or financial outlook or the assumptions on which the forward-looking statements and financial outlook are based on. Investors are further cautioned that the foregoing list of factors and assumptions is not exhaustive. In addition, information regarding targeted returns is based on the following principles and assumptions: the Partnership will maintain a consistent level of cash flow and indebtedness and will not materially incur additional indebtedness, other than with respect to ordinary operating costs or as disclosed herein; the consumer price index, property taxes, operating expense growth, and market rent growth will be as anticipated; existing tenants will fulfil their current contractual lease obligations and remain in occupancy and pay rent for the term of their leases; upon expiry of their leases, the number of retained tenants will meet historical retention experience; and the Partnership will maintain cash reserves as anticipated. Other assumptions used by Western Wealth Capital to model the costs and create the worksheets laid out in this document. x Bring rents to market levels in year one then increase by 4% annually in years 2 to 5. x Occupancy remains at an average of 93.8% per year. x Sales commissions at time of sale is up to 1% of sales price. x Asset value at time of sale is calculated using a 5.25% CAP rate. The Partnership Although we believe that the assumptions on which the forward-looking statements are made are reasonable, based on the information available to it on the date such statements were made, no assurances can be given as to whether these assumptions will prove to be correct. Accordingly, readers should not place undue reliance on forward-looking statements. We will not update any forward-looking information except as, and to the extent, required by applicable Canadian securities laws. The forward-looking statements contained herein, and all subsequent written and oral forward-looking statements attributable to the Partnership, or persons acting on any of their behalf, are expressly qualified in their entirety by this cautionary statement. Market data and certain industry statistics used throughout this executive summary were obtained from market research, informational and marketing materials provided to the Western Wealth Capital, publicly available information and industry publications. Industry publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not
guaranteed. No representation or warranty is made by the Partnership as to the accuracy or completeness of any of the
information contained herein. No securities commission or similar regulatory authority has passes on the merits of the
securities referred to hereunder and any representation to the contrary is an offence. In considering the prior performance
information contained herein, prospective investors should bear in mind that past performance is not necessarily indicative
of future results, and there can be no assurance that the Partnership will achieve comparable results.
Risk Factors
Investment in the Partnership involves a high degree of risk and is suitable only for sophisticated investors who can
withstand the loss of their entire investment and requires the financial ability and willingness to accept the high risks and
lack of liquidity inherent in an investment in the Partnership. No assurance, representation or warranty can be given that the
Partnership’s investment objectives will be achieved or that investors will receive a return of their capital.
An investment in Units is subject to risk. Standard risks applicable to investments of this nature include:
x No market for Units: There is currently no resale market for the Units and it is not guaranteed that any market will
develop. The Units are not transferable without the approval of General Partner and in compliance with applicable
securities laws and regulations.
x Vacancy Rates: The apartment building business relies on a steady supply of good quality tenants. A shortage of quality
tenants due to an economic downturn or job losses in a given marketplace could result in higher than expected vacancy
and lower than expected revenue.
x No guaranteed return: The projected returns described in this Investment Summary are not guaranteed. An investment
in Units is not suitable for investors who cannot afford to assume significant risks in connection with their investments.
x Tax matters: Investors should consult their own tax advisors for advice with respect to the tax consequences of an
investment in the units based on their particular circumstances.
x The Partnership: intends to acquire units in a Delaware limited partnership (the “LP”), and the Partnership will own units
in the LP. In the event of a refinancing of the property, the Partnership will be entitled to participate in the net proceeds
of the refinancing on a pari passu basis. For more information, investors are advised to review the agreements governing
the relationships described herein.
Limited Partnership
Partnership Name - Western Wealth Capital LIV Limited Partnership and Western Wealth Capital LIV US Investor, LP.
Western Wealth Capital LIV Limited Partnership and Western Wealth Capital LIV US Investor, LP have been organized with
the aim of providing strong rates of return through distributions and capital appreciation by participating in the acquisition
and management of an apartment complex located in the U.S.
Investment Management & General Partner
The general partners are WWC GP Inc. of Western Wealth Capital LIV Limited Partnership and WWC LIV US GP, LLC of
Western Wealth Capital LIV US Investor, LP. The managers of the general partners are Janet LePage and David Steele. They
will be responsible for the strategic and financial direction on Stone Canyon Apartment Homes. Janet LePage has
completed over 80 real estate projects in Arizona. Dave Steele has developed over 85 projects, valued at over
$1,500,000,000 and has helped individual investors acquire over 11,000 investment properties in Canada and the United
States. Together, Janet and Dave have over 30 years of experience in managing, repositioning and divesting multi-family
real estate.
Contact Us
Phone: +1 (604) 260 4789
Email: info@westernwealthcapital.com
Please visit our website to find out more on how to
participate in our latest investment opportunity:
Janet LePage, David Steele,
www.westernwealthcapital.com
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