Ballast Rock Announces 2023 Year-End Performance of its Sunbelt Real Estate Funds Ballast Rock Group anticipates launching its third Southeast-focused workforce multifamily fund in 2024.
CHARLESTON, S.C.
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January 11, 2024 10:00 AM Eastern Standard Time
Ballast Rock, the diversified investment management firm, today announced 2023 year-end performance of its two multifamily real estate funds.
Sunbelt Multifamily Fund II (SB2), which launched in 2021, closed the acquisition of its final asset in early 2023, bringing total assets in the fund to $105,363,000. The fund has acquired a total of 1,049 units, with an equity contribution of $52,452,012.
The fund generated cash from operations for its investors of 7% in 2023. SB2 maintained an average capitalization rate of 7.2% for the year, with 7% in the first half and 7.4% in the second half of 2023. SB2 paid 7.5% from income to investors in 2021, 7.5% from income in 2022, and now will have paid 7% to investors in 2023 from income.
“In a challenging year when we saw many private equity real estate funds calling additional capital or halting payments, we were pleased that our focus on workforce multifamily in high growth states in the Southeast delivered results for our investors,” said Thomas Carroll, Chief Executive Officer of Ballast Rock. “This performance is a shared success, since all of our principals invest our own capital alongside our investors, aligning our interests, and delivering safe, clean, and affordable homes for residents in our communities.”
Ballast Rock had anticipated launching Sunbelt Multifamily III (SB3) in 2023 but did not identify a property that met its strict qualitative and quantitative underwriting standards. Over the course of 2023, the company performed diligence on more than 350 potential assets but chose to not pursue any acquisitions based on price discipline and the expectation that sponsors that bought assets in 2021 and 2022 at the wrong price with too much floating rate debt are likely going to need to sell in 2024 and 2025 as they will be unable to refinance those deals on economic terms. Ballast Rock’s Atlanta-based real estate team continues to identify and perform diligence on several properties and anticipates a launch of the $100 million Sunbelt Multifamily Fund III in 2024, subject to finding the right properties at the right price.
“We remain committed that our focus on workforce housing in the Southeast is the right strategy, and we anticipate that there will be excellent opportunities to acquire the right properties at attractive valuations in the coming months,” said Ian Garcia, Chief Operating Officer of Ballast Rock Real Estate. “We will continue to actively underwrite assets, but we will never sacrifice our diligence or discipline.”
Ballast Rock launched Sunbelt Multifamily Fund I (SB1) in 2019 and between February 2019 and January 2021 acquired nine properties totaling 1,110 apartment units for $63,630,000. SB1 began dispositions in early 2022, generating gross proceeds of $60,450,000 from the first four properties sold. The 593 apartment units involved were acquired at an average cost of $53,583 per unit and sold at an average cost of $101,939 per unit. Thus far SB1 has made a total of $41,963,582 of investor distributions on $30,000,000 of equity invested in the fund. Ballast Rock anticipates exiting the remaining five assets in SB1 opportunistically over the next 12 to 18 months.
Also in 2023, Ballast Rock launched Ballast Rock Capital, its broker-dealer. Ballast Rock Capital is a member of the Financial Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC) and is registered with the Securities and Exchange Commission (SEC).
About Ballast Rock Group
Ballast Rock Group is an integrated investment management company specializing in delivering risk-adjusted returns, accurate, and timely advice, high quality frequent reporting, and direct access to management. Ballast Rock Group operates Ballast Rock Asset Management, Ballast Rock Private Wealth, and Ballast Rock Capital. Ballast Rock Asset Management comprises Ballast Rock Real Estate, which includes the firm’s Sunbelt multifamily real estate funds, and Ballast Rock Ventures, comprising venture capital and private equity teams. Ballast Rock Private Wealth is a registered investment advisor, with a focus on alternative strategies. Ballast Rock Capital is awaiting approval to become a FINRA-registered broker-dealer. Ballast Rock is committed to being a driver of positive change. The diversity of our team members brings valuable new perspectives to our industry for the benefit of our stakeholders and the broader community.
Investment Disclosure
The information contained in this press release has been prepared by Ballast Rock Holdings LLC (“Ballast Rock”) without reference to any particular reader’s investment requirements or financial situation. Potential investors are encouraged to consult with professional tax, legal, and financial advisors before making any investment into a private offering of securities. An investment in private securities would be speculative and would involve a high degree of risk. Investors must be prepared to bear the economic risk of such an investment for an indefinite period of time and be able to withstand a total loss of their investment. Please consider carefully the investment objectives, risks, transaction costs, and other expenses related to an investment prior to deciding to invest. Ballast Rock Capital LLC (“BRC”), MEMBER: FINRA / SIPC. BRC’s registered head office is 460 King Street, Suite 200, Charleston, SC, 29403. Tel: 800-204-2513. To check background information about BRC and its representatives, visit FINRA’s BrokerCheck. Please see important disclosure information in our Form CRS.
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