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Multifamily Investment Programs Value-Added Multifamily Investments
Our goal is to make intermediate-term investments in multifamily rental properties and portfolios that have the potential for value creation through moderate rehabilitation and/or new property and asset management. We identify undervalued multifamily properties which can be acquired at favorable purchase prices because of any number of issues, such as: (i) above average economic vacancy, (ii) weak property management, (iii) deferred maintenance, (iv) inefficient utility structures, or, (v) cumbersome existing financing. We structure value-added multifamily investments either as “one-off” investments, or in single or multi-investor fund formats. These can also be structured as Tenant-In-Common (TIC) investments using 1031 exchange money or as co-investments with institutional partners. Each investment is typically held for 3 to 7 years. The exit strategy for investors is either a market sale or, in the case of a joint venture investment, a TIC “take out” of the property at fair market value. A typical example would be Cameron Crossing Apartments in Greenville, South Carolina. This property was originally constructed in 2004 utilizing financing obtained through a U.S. Department of Agriculture (“USDA”) loan program. Rigid rent restrictions required by the USDA loan resulted in a lender foreclosure, which allowed Stratford Capital to acquire the property with an institutional partner at a price substantially below its appraised value and replacement cost. It is expected that after a 12- to 36-month stabilization period, a market sale or TIC “take out” will be negotiated. Target properties are located in strong, secondary markets that have above average long-term growth potential. Our focus is on markets that are in Mid-Atlantic, Southeast, Northeast, Southwest and selected Upper Midwest cities. Tenant-In-Common Transactions (“TICs”) Stratford Capital’s Tenant-In-Common (TIC) offerings allow individual investors seeking to accomplish a 1031 tax-deferred exchange to benefit from our 100+ years of combined experience in acquiring, financing, developing and asset-managing multifamily rental apartment communities across the United States. TIC investments follow our value-added acquisition model with comprehensive asset management and typically involve equity raises of $3 to $15 million from a single, or up to 35, TIC investors. The average holding period is 7 to 10 years. Through investing in a Stratford Capital-sponsored TIC offering, individual investors benefit from the specialized expertise of our firm and are able to (i) free themselves from the day-to-day burdens associated with direct property ownership/management, (ii) defer capital gains from the sale of their relinquished property, (iii) purchase institutional grade multifamily apartment properties that would normally be out of their reach, and (iv) enjoy a pro rata share of annual depreciation benefits, cash flow and the appreciation potential inherent in each property. Investors receive a separate deed and title policy according to their ownership interest and cash flow distributions are made monthly. The TIC industry has grown out of a 2002 IRS Revenue Procedure (“Revenue Procedure 2002-22”), which provides qualified individual investors with the ability to defer their capital gains tax obligations on the sale of a property through a fractionalized 1031 tax-free exchange of an investment in a replacement or in-kind property. We have completed five TIC offerings to date: Brittany Point Apartments, Patchen Oak Apartments, Breckinridge Square Apartments, Brandywine at Lafayette Apartments, and Newport Manor Apartments. Tax Credit Development and Syndication The principals of Stratford Capital have an extensive 14-year track record in the syndication and development of affordable housing properties utilizing Low-Income Housing Tax Credits alone, or in combination with Federal and State Historic Tax Credits (collectively, the “Tax Credits”). During this time, the principals of Stratford Capital have also raised approximately $420 million in equity for Tax Credit Transactions from more than 60 corporate and institutional clients, including Morgan Stanley, SunTrust and American Express. We are currently developing a tax credit property in Weymouth, Massachusetts involving the adaptive re-use and substantial renovation of the historic Alice Fulton School. The redevelopment of this project was awarded to Stratford Capital Group through the Town of Weymouth’s issuance of a competitive Request for Proposal. The development includes 63 apartment units, 100% of which will be affordable. The development will be financed utilizing multiple layers of financing, including Low Income Housing Tax Credits issued through the Massachusetts Department of Housing and Community Development, Federal and Massachusetts State Historic Tax Credits, Affordable Housing Trust Funds, HOME Funds and a permanent loan from MassHousing. The projected total development cost is approximately $15 million. The principals of the Stratford Capital Group have been involved in the adaptive re-use and renovation of several historic schools including the Samuel Brown School located in Peabody, Massachusetts; the Corcoran School located in Clinton, Massachusetts; East Junior High located in Watertown, Massachusetts; and the Cameron School located in Lenox, Massachusetts. Also, the principals of Stratford Capital have been involved in the successful development/redevelopment of 49 properties utilizing Tax Credits. Investment Analysis Stratford Capital invests in only one property type – multifamily residential rental apartment properties where we believe we can add value. We believe that this asset class-specific focus creates an enhanced and thorough understanding of acquisition candidates and their respective markets leading to more informed and timely decisions needed in this highly competitive acquisition and financing environment. We employ a disciplined and iterative approach towards targeting and acquiring conventional apartment complexes with the ultimate aim of creating value by maximizing property net operating income (“NOI”). We typically make investments in properties that we believe have intrinsic value and a competitive acquisition basis. Stratford Capital targets properties that are C+ to B class properties in B to A- class locations. Properties targeted for acquisition are generally in need of moderate rehabilitation and/or improved property and asset management in order to better compete within their respective submarkets and realize their NOI potential. The property acquisition process employed by Stratford Capital is best described as being detailed, rigorous and focused, and our results to date have been impressive. The following is a brief overview of our key property acquisition elements: Process Profile Underwriting |
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CASE HISTORIES AT A GLANCE Breckinridge Square Apartments
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