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Threshold Purchases 1,128 Unit Apartment Portfolio
Tuesday, August 1, 2017
Press Releases
On August 1, 2017, Threshold Capital, LLC sponsored the acquisition of 1,128 units comprised of seve ...
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On August 1, 2017, Threshold Capital, LLC sponsored the acquisition of 1,128 units comprised of seven apartment properties in North & South Carolina from a private seller. The acquisition was financed via assumption of existing fixed rate secured debt with approx. seven years remaining until maturity. Threshold has set aside nearly $3.75 Million for renovations and working capital. With this purchase, Threshold now owns 34 properties totaling 5,320 units in North and South Carolina.

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Threshold Purchases 1,200 Unit Apartment Portfolio
Thursday, October 6, 2016
Press Releases

On October ...
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On October 6, 2016, Threshold Capital, LLC sponsored the acquisition of 1,200 units comprised of nine apartment properties in North & South Carolina from a private seller. The acquisition was financed with Fannie Mae DUS floating rate indexed to LIBOR, with option to convert to fixed rate.  Threshold has set aside nearly $4 Million for renovations.  With this purchase, Threshold now owns approximately 4,200 units in North and South Carolina. 

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Threshold Acquires Texas Property
Tuesday, April 9, 2013
Press Releases

On April 9, 2013, Threshold Capital, LLC sponsored the acquisition of The Hunnington ...
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On April 9, 2013, Threshold Capital, LLC sponsored the acquisition of The Hunnington Apartments in Sherman, Texas.  The 232 unit property was built in 1985.  The acquisition was financed through the Fannie Mae DUS program at a very attractive 3.62% fixed rate and a seven year term.  The capital improvement plan includes siding replacement, exterior painting, pool area upgrades, clubhouse renovations, and an interior upgrade program.

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Threshold Closes Refinance
Monday, October 1, 2012
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Wo ...
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Woodbridge Crossing Apartments, Temple, TX - exercised the option converting variable interest rate debt to an outstanding fixed rate of 2.61% and resetting loan maturity to October 2019.

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Threshold Acquires North Carolina Property
Friday, September 7, 2012
Press Releases

On September 7, 2012,  Threshold Capital, LLC sponsored the acquisition of The ...
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On September 7, 2012,  Threshold Capital, LLC sponsored the acquisition of The Enclave at North Point, a 370 unit multifamily property in Winston Salem, North Carolina.  The transaction represents an approximate $10.9M capitalization, including more than $1M of funding for property improvements and interior upgrades.  The property was financed through Fannie Mae at an attractive 4.12% rate, with two years of interest only payments and a 10 year term.  This latest acquisition further expands Threshold’s market presence in North Carolina, now totaling 18 properties and approximately 3,000 units.

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Threshold Closes Refinance
Wednesday, August 1, 2012
Press Releases

Mi ...
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Mill Creek Apartments, Abilene, TX – exercised the option converting variable interest rate debt to an outstanding fixed rate of 2.75% and resetting the loan maturity to August 2019.

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Threshold Closes Refinance
Friday, June 29, 2012
Press Releases

Th ...
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Threshold Capital successfully refinanced The Oaks of Timbergrove Apartments in Houston, Texas.  Through the Freddie Mac Capital Markets program, Threshold was able to borrow at a very attractive fixed rate of 3.87%, with a 24 month interest only payment period and a 30 year amortization schedule thereafter.  The new debt significantly reduced the borrowing cost from the existing loan, which carried a 4.995% fixed rate.  This transaction marked the second successful refinance for The Oaks of Timbergrove. 

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Two Mississippi Properties Sold
Friday, June 29, 2012
Press Releases

Threshold Capital successfully sells Hampton House & Ridgeland Ranch Apartments in Ja ...
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Threshold Capital successfully sells Hampton House & Ridgeland Ranch Apartments in Jackson, Mississippi.   Threshold structured a 1031 tax deferred exchange, targeting value add properties for its investors. 

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Threshold Closes Refinance
Monday, June 11, 2012
Press Releases

Threshold Capital successfully refinanced Brookhollow Apartments in Dayton, Texas. Through the Fr ...
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Threshold Capital successfully refinanced Brookhollow Apartments in Dayton, Texas. Through the Freddie Mac Capital Markets program, Threshold was able to borrow at a very attractive fixed rate of 3.96%, with a 30 year amortization schedule. Through this refinance, Threshold Investors received a cash distribution representing 40% of their original investment. The new debt reduced the borrowing cost from the existing loan by more than 200 basis points, which carried a 6.07% fixed rate.

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Threshold Acquires Texas Property
Thursday, September 15, 2011
Press Releases

On September 15, 2011,  Threshold Capital, LLC sponsored the acquisition of Gut ...
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On September 15, 2011,  Threshold Capital, LLC sponsored the acquisition of Guthrie Creek, a 160 unit multifamily property in Longview, Texas.  The transaction represents an approximate $5.2M capitalization, including significant funding for property improvements and interior upgrades.  This latest acquisition gives Threshold a total of over 7,000 apartment units and further expands its market presence in Texas.

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Demand For Apartments Surges, Despite Economy
Thursday, August 25, 2011
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From Investor’s Business Daily on Thursday, August 25, ...
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From Investor’s Business Daily on Thursday, August 25, 2011

 Rising renter demand is filling apartment buildings around the U.S., in defiance of the economic malaise.  Vacancy rates are shrinking all over, in tight markets such as Minneapolis and loose ones like Phoenix.  It's an unusual situation. Job creation typically drives apartment demand. But this time the tenant top-up is largely about a lack of new supply—in the face of paltry employment growth. Meanwhile, demographic trends and the single-family housing slump are creating tenants, says Hessam Nadji, a managing director at Marcus & Millichap Real Estate Investment Services.  "The demand for apartments is at levels that we haven't seen since economic boom years like those in 1999 and 2000," he said. "It is clearly decoupled from the economy."  The property brokerage projects that asking rents will grow an average of 3.5% this year in the U.S.  After the Big Apple at just a 2.8% vacancy rate, the tightest areas are now Minneapolis, San Jose, Calif., and Portland, Ore., all under 4%.

 

Widespread Improvement

 Some 3 million young adults age 24-34 that moved back in with family or roommates in the last five years are now moving into their own places as their employment prospects improve, Nadji says. Hiring has sputtered over recent quarters, but this age group captured 65% of the new jobs created in 2010.  Other factors are creating tenants too, Nadji notes: A double-dip in single-family home values has made house hunters wary of buying.  Tougher mortgage qualification requirements deter purchases. And homeowners who lost houses to foreclosure have become renters.  Together, those trends helped to lower the U.S. average apartment vacancy rate to 5.9% at the end of the second quarter. That was a 1.9 percentage point improvement from a year earlier, as noted by Marcus & Millichap.While bellwethers like New York and Boston are among markets with vacancies below average, Minneapolis, Milwaukee and other markets also beat the average, largely due to decent job creation and scant new construction. Minneapolis employers added 7,000 workers in the first half of 2011. They had let go 6,200 a year earlier.  Among very tight markets, Minneapolis and Portland vacancy rates fell 2.2 percentage points from a year ago in the second quarter.  Even markets that were battered by rampant speculative home and apartment construction in the last decade have seen rapid improvement.  Vacancy in Las Vegas, for example, plunged to 8.1% at the end of une from 11.1% a year earlier.  Continuing weakness in the Las Vegas housing market contributed: One in every 99 homes in the metro received a foreclosure notice in July.

But now the jobs picture is improving slightly. Employers are expected to hire 16,200 workers this year, which would mark the first year of job growth since 2007.  A glut of empty single-family homes reverting to rental houses in Sin City and other overbuilt markets could slow further occupancy gains, Nadji says. But he and other observers point out that single-family homes don't appeal to most renters ages 24 to 35. Instead they want places that provide maintenance, amenities and services.  Terry Considine, CEO of Denver-based Apartment Investment and Management Co. (NYSE:AIV - News), told analysts during the secondquarter earnings call in July that foreclosed homes and rental houses were "not really competitive with professionally managed apartments."

"They serve different market segments where customers have different interests and preferences," said Considine, whose company owns or manages more than 600 multifamily properties in 38 states, Washington, D.C., and Puerto Rico.

 

Buying Splurge

 Encouraged by improving fundamentals, investors are flocking to apartments. Some $21.6 billion in multifamily properties changed hands in the first half of 2011, more than double a year earlier, says Real Capital Analytics, which tracks sales of more than $5 million.  Capitalization rates slid to an average 6.4% in the second quarter from 6.6% in the first. They tell a property's initial yield, falling as prices rise.  Sellers in major coastal markets are fetching prices that reflect cap rates of 5% or less, says Jeffrey Baker, executive managing director in the New York office of global brokerage Savills. That's sending some institutional investors to secondary markets, where yields are higher.

It also is sparking new construction, which can ultimately generate higher yields of 6.5% to 7.5% for investors. Savills recently arranged equity financing for The Victor, a $140 million luxury apartment project in Boston that just broke ground. It's the first big multifamily development in the city since the financial markets collapsed in 2008.

"There certainly will be some measured development that's going to happen over the next couple of years," Baker said.  Opportunities also exist for mom-and-pop investors in most markets among smaller properties, yet to appreciate at the same rate as top-tier assets, Nadji and Baker say.  While buyers typically need to do minor upgrades to justify rent increases in such properties, the reasons to pursue acquisitions have become more compelling, particularly with interest rates around 4.5% on a 10-year loan, Nadji adds.

"The turmoil in the stock market has made people think harder and more aggressively about buying apartments," he said.

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Threshold Closes Refinance
Thursday, August 11, 2011
Press Releases

Threshold Capital successfully refinanced Sedona Ranch Apartments in Dallas, Texas.  Through ...
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Threshold Capital successfully refinanced Sedona Ranch Apartments in Dallas, Texas.  Through Fannie Mae’s DUS program, Threshold was able to borrow at a very attractive fixed rate of 4.69%, with a 30 year amortization schedule.  Through this refinance, Threshold Investors received a cash distribution representing 64% of their original investment.   The new debt also reduced the cost of borrowing from the existing loan, which carried a 6.05% fixed rate.

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Threshold Acquires Shreveport Property
Thursday, June 30, 2011
Press Releases

On June 30, 2011,  Threshold Capital, LLC acquired the 122 ...
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On June 30, 2011,  Threshold Capital, LLC acquired the 122 unit Brighton Manor Apartments in Shreveport, Louisiana.  The property was immediately renamed Castlewood Apartments.  The transaction represents an approximate $4.6M capitalization, including funding for property improvements and interior upgrades.  This latest acquisition now gives Threshold a total of 1,260 units in the Shreveport/Bossier City market.

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The Advantage for Investing in Apartments
Thursday, March 10, 2011
News

Have you ever wondered how to invest in apartments? One way to do th ...
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Have you ever wondered how to invest in apartments? One way to do this is through a private equity fund. A private equity fund is a group of investors who come together and purchase equity shares in a company with the intention to purchase large assets like apartment complexes. If you have ever considered investing in real estate this may be a great option for you.

Getting involved in a private equity fund has some definite advantages over other investment areas. Here are just a few of the advantages:

  • A Private Equity Fund performs intensive due diligence on potential acquisitions. By utilizing a team of specialized third-party professionals, the fund is able to better identify risks that would otherwise be overlooked.
  • Properties acquired are often made more efficient and produce higher profits. These funds use specialized and skilled management teams to correct problems that may have been overlooked by previous management.
  • The management receives a portion of the profits so managers and staff are motivated to produce superior results to investors. Although this is often criticized for taking money from the investors, it is a very big incentive for managers and insures the management team has "skin in the game.”
  • A Private Equity Fund also gives the investor the advantage of getting in at the ground floor. One exciting aspect of a private equity fund is that, although the investor will be going into a new transaction, the risk is greatly diminished due to the experience of the management team. The investor reaps the benefits of higher returns, with less risk, due to the stability of the existing team.

These are just a few of the advantages a Private Equity Fund has to offer. To learn more about how the process works, and how you can get involved, contact Threshold Capital via the following link: http://threshold.test.visionary.com/contact_us.php

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Promising Predictions for the 2011 Apartment Industry
Tuesday, January 11, 2011
News
Attachment: View attached PDF

Is it really possible that 2011 will usher in one of the strongest a ...
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Is it really possible that 2011 will usher in one of the strongest apartment markets ever? Some economists think that forces such as an improving economy and continued turmoil in the single family housing market are conspiring to produce an environment in which the industry will be experiencing almost back-to-trend rent levels, occupancy growth and rent increases that may even be comparable to statistics obtained during the glory days of the mid-2000s.

"I have been in the business for 30 years, and this will be one of the best apartment markets that I have ever seen," says one of the more bullish analysts, Ron Johnsey, president of Axiometrics Inc.

Gleb Nechayev, senior economist, Global Research and Consulting-Econometric Advisors at CB Richard Ellis, forecasts that average economic rent will reach $1,130 per unit by the end of this year. This level is a mere 3 percent below the $1,167 achieved at the height of the apartment market in the third quarter of 2008.

There is a good chance, says Nechayev, that the actual rent may even surpass what he foresees."What's driving rents now is not only the job creation, but also rapid expansion in the number of renter households by necessity, mainly due to foreclosures." he adds.

Rents may jump

Get ready for continued firming of occupancies this year. Johnsey's forecasts call for the average vacancy rate to drop in 2011 to 5.8 percent— a solid statistic considering apartment properties aim for vacancy rates of 5 percent for optimal rent increases. The higher occupancy levels will burn off concessions. Consequently, effective rents will increase, Johnsey forecasts, by 5 percent in 2011. This number compares impressively with rent increases of 5.94 percent achieved in the last peak in the second quarter of 2006. "That tells us it's a very robust apartment market, when you can hike the rents and still increase occupancy," says Johnsey.

Ron Witten, president of Witten Advisors LLC, has similar projections for apartment fundamentals. Witten, who studies buildings of five-plus units, says the average national apartment occupancy level will be above 95 percent by the end of the year. That should translate to an effective rent growth rate at the end of 2011 of 4.5 percent, which he says is"well above average"and "very strong."

This year, the apartment market could be continuing the trend established in 2010, when conditions improved markedly and rapidly, and perhaps somewhat unexpectedly, during the course of the year. "It's amazing. It was as though someone turned the light switch on in January 2010," says Johnsey. According to Johnsey, rents fell for 17 consecutive months through December 2009, but turned positive beginning in January of 2010. Rents were 0.2 percent in January 10, and remained positive for almost every month through the fall of 2010.

The apartment market bottomed in the fourth quarter of 2009, explains Delores Conway, professor of statistics and real estate economics at the Simon School of Business at the University of Rochester. But by the end of 2010, it had already enjoyed three consecutive quarters in a row of recovery, she says. By then, occupancies were on the way up in most markets, while rents were improving in many, notes Witten.

The national vacancy rate fell on a year-over-year basis from 7.8 to 7.1 percent, says Conway. 'This is a big drop," she says, adding that the last time there was such a significant improvement in the vacancy rate was in 2005. Net absorption was 160,000 units through late last year, she adds. "That, to me, indicates the apartment market [was] really starting to recover, and the recovery appears to be firm."

Economy improves slowly

Most economists expect GDP growth in 2011 to be 2 percent to 3 percent—not much higher than 2010's expected GDP expansion of around 2.5 percent. According to Conway, the current economic recovery is unlike most recoveries, in which there typically is a "pop" in activity after the recession. "We [expect] economic growth this year to proceed at a reasonable, but slow, rate,"says Conway.

Uncertainty, as well as the weak housing market, combined with the housing and financial crises, are the reasons behind what is expected to be a slow climb out of tepid economic-growth land. "Although interest rates are very low, it is very, very difficult to obtain loans for small businesses, which are usually the ones to lead the way on the path to recovery,"says Conway. "And a lot of the leverage held over from the days of the financial crisis have yet to be unwound," she notes.

The apartment industry, whose health usually depends on the level of employment, rebounded surprisingly robustly last year. However, job growth has only been moderate at best, and many economists expect it will take several more years before the 8 million-plus jobs lost in this past recession will be recovered. "It will probably be 2015 before the employment level will be back to where it is desirable," predicts Witten.

Witten says unemployment will remain "very high" in 2011, between 9 percent and 10 percent, through the end of the year. Axiometric's Johnsey believes it will be 2013 before there will be robust job growth. He predicts an annual average job growth rate of 378,000 jobs per month in 2013. Meanwhile, he expects about 172,000 jobs to be created this year, at an annual average rate of 1.6 percent. This is a weak number, considering 125,000-150,000 additional jobs are needed per month just to absorb new workers entering the labor force. With an extension of the Bush tax cuts for the middle class and high-income earners, however, economic growth may be stronger, he says. Witten also projects 2 million-plus jobs created this year, versus 1 million or fewer in 2010.

Homeownership is suppressed

So why will demand for apartments continue to be firm in 2011 despite the lackluster employment levels? One reason is that in an uncertain economy that is still finding its way, residents are staying put in their apartment units, and consumers are choosing to rent instead of buying homes. "It is a part of the outcome of high unemployment and relative uncertainty of the economy, which has increased the propensity to rent rather than buy," says Witten.

Furthermore, there is little pressure to buy homes, notes Conway, given that home prices are flat or still declining in many areas of the country and interest rates are remaining low. Indeed, the Standard & Poor's/Case-Shiller home price index fell further, by 0.7 percent, in September, compared to the previous month.

The homeownership rate—66.9 percent in the third quarter—has tumbled from its peak level of 69.2 percent, achieved in the fourth quarter of 2004 during the height of the condo boom. Witten thinks the homeownership rate will fall further this year before heading up. REIT executives note that every 1 percent drop in the homeownership rate translates into more than 1 million new renters. The continuing trend of home foreclosures, though unfortunate for those affected, may also be making a good situation for apartments great. It is a major reason why apartments will perform strongly this year. A record 2.82 million homes were foreclosed in 2009, and 2010 was on track to have 1 million additional foreclosures, though the foreclosure rate seems to have begun to stabilize, if not decline, toward the end of last year. In October 2010, one in every 389 housing units received a foreclosure filing. While they can give rise to a shadow inventory of rentals, foreclosures also drive masses of former homeowners into rentals as they lose their homes, and push dissatisfied residents staying in under-managed home rentals into apartments.

While job creation has yet to kick in significantly for a number of years, the state of the economy as an engine for the robust apartment numbers cannot be discounted. There was some job recovery in some parts of the country, says Conway, such as New York, New Jersey, Boston and the Silicon Valley. "There were great environments for effective rent growth," agrees Johnsey.

According to Johnsey, the slowly improving economy—at least in some parts of the country—will continue to drive up the level of household formation. After a year of doubling up during the downturn, residents, including Echo Boomers who moved in with their parents, will continue to decouple and seek their own apartments as the economy improves.

Aggravating the effects of strong demand for apartments, new construction will fall further this year, Witten projects. He predicts that apartment completions (of five-plus units) will fall from 108,000 units in 2010 to a mere 70,000 units in 2011— fraction of the 200,000-250,000 units that are the norm. But new construction may gear up again starting this year as credit becomes more available. In fact, Johnsey suggests making the most of opportunities now as he predicts that the apartment occupancy rate will flatten at 95.4 percent between 2012 and 2014, and weaken starting in 2014. Rent growth will fall to 3.4 percent in 2014 as a result of increased levels of construction beginning in 2011 or 2012. In the meantime, however, NOI will start rising again and that will, ultimately, further increase apartment valuations in 2011, he points out.

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