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• Acquired at a 23% discount to the seller’s initial 2023 guide price, at an underwritten pro-forma Year 1 stabilized cap rate of 6.0%.
• Attractive cost basis of $134.6k per unit — a significant discount to comparable in-market assets.
• More than $2.3mm invested by the previous owner converting the asset from student housing to conventional multifamily.
• Our business plan calls for an additional $2.2mm in capex to renovate units, replace roofs property-wide, and add on-site amenities.

• Windtree boasts a median income of $47,079 and $43,603 in the 1- and 3-mile areas respectively.
• Windtree was previously owned by the original developer — a Fayetteville based real estate development company that builds single family home communities and owns over 700 multifamily units. Despite their multifamily experience, the previous owner would consistently renew tenants at below market rates – what we typically see with a “mom and pop” operator – to keep tenant turnover as low as possible.
• While the previous owner is an experienced owner-operator, they tended to operate to maximize physical occupancy rather than economic occupancy and have left rents below market for some time. As a result, we expect to acquire a property that is nearly 100% occupied and has residents who have seen marginal rent increases in the years leading up to this sale.
• Ballast Rock will be able to maximize the property’s performance while maintaining a strong resident base through improved operations and renovations.
• Within a 3-mile radius of Windtree, 34% of all employees work in education & health services, which we view among the most stable employer types.
• Windtree is only a 10-minute drive from Cape Fear Valley Medical Center. The medical center is a staple location for Cape Fear Valley Health Systems, the third largest employer in Cumberland County.
• Windtree’s two main rental competitors, Legacy at Cross Creek ($382-$393 per month higher) and Morganton Place ($283-$508 per month higher) have significantly higher asking rents than Windtree. As a result, we expect Windtree will have minimal turnover as we raise rents in line with the Fayetteville market.
• Due to our experience owning and operating three other properties in Fayetteville — Heather Ridge, North Crossings, and Sycamore Townhomes — our acquisition and asset management teams have significant knowledge of market rental rates and the in-market expenses associated with managing multifamily properties in Fayetteville.
• Between late July, when Ballast Rock went under contract to purchase Windtree, and late September, the 10-year Treasury increased by 23%. Given the effect this interest rate movement had on our loan terms, Ballast Rock was able to negotiate a significant discount to the originally negotiated purchase price.
• We exited our Fayetteville holdings — Heather Ridge, North Crossings, and Sycamore — at various stages this past spring/summer. Those sales were opportunistic because of the interest rate environment in 4Q21/1Q22 and the type of buyer who was looking at the deals, rather than a reflection of our view on Fayetteville as a market. To put the dispositions in the context of this acquisition, the table below compares trailing cap rates, price per door, year of construction, and asset class:

• While this is a split property portfolio, Stone Brooke and Arbordale are only a three-minute drive from each other, affording us economies of scale from a management perspective as we are able to run both properties out of Stone Brooke’s leasing office.
• Stone Brooke boasts a median income of $56,475 and $49,613, while Arbordale has a median income of $55,749 and $51,239 in the 1- and 3-mile areas.
• Within a 2-mile radius of Stone Brooke and Arbordale, 24% and 23% of all employees work in education & health services, which we view as two of the most stable service-producing industries.
• Along with strong stable service-producing demographics, the Dalton area is anchored by the carpet and manufactured flooring industry. The city of Dalton and the surrounding Whitefield County area are known as the “Carpet Capital of the World”. Currently, more than 90% of the world’s functional carpet is produced within a 65-mile radius of Dalton. The carpet industry employs more than 30,000 people in the Whitefield County area and is home to over 150 carpet plants.
• Both Stone Brooke and Arbordale are primed to take advantage of a significant supply-demand mismatch for rental units in the Dalton area. According to the US Census Bureau, 56.4%, or ~19,400 out of 34,000, Dalton residents are renters. However, there are only 2,563 market-rate rental units in Dalton and its combined suburbs. This critical supply-demand mismatch is at the core of all of our multifamily investments but is especially accentuated in the Dalton MSA.
• Our plan for both properties is to upgrade exteriors, amenities and continue deluxe upgrades (appliances, countertops, flooring, lighting, bathrooms, and other miscellaneous improvements). We’ve budgeted more than $13.5k per unit per property to complete these upgrades.
• Since our initial underwriting in December, the financial performance of both properties has remained strong; rents have increased by 3.9% at Stone Brooke and 4.1% at Arbordale.
• Both Stone Brooke and Arbordale are located only a half-hour away from the head of our property management arm and two hours from our acquisitions and asset management teams. This proximity to the top member of our operations team gives us confidence that we will be able to quickly hit the ground running operationally, avoiding hiccups that often occur during asset take-over.

• Landmark Woods boasts a median income of $58,018 and $49,145 in the 1- and 3-mile areas.*
• Within a 2-mile radius, 25% of all employees work in education & health services (industries we view as stable employers).*
• Basswood Apartments has a median income of $79,608 and $59,407 within 1- and 3-mile areas.*
• Within a 2-mile radius, 46% of all employees work in education & health services.*
• Both Landmark Woods and Basswood Apartments are well located in Florence, affording close proximity to strong economic drivers.
• Both properties are within 15 minutes of Francis Marion University. Landmark Woods is 8 minutes from Florence’s McLeod Medical Center, while Basswood is 6-minutes from MUSC. McLeod Health and MUSC are the largest and third largest employers in Florence, respectively.*
• Prior to our acquisition, the previous owner completed light renovations, which were primarily focused on replacing flooring in just under 40% of Landmark Woods’ units. With these light renovations complete and Basswood featuring 100% classic units, both Landmark Woods and Basswood are primed for our systematic value-add program.
• Our plan for these two properties is to take on medium upgrades (appliances, countertops, hardware, flooring, and cabinets). Due to the strong upkeep of the property, we have budgeted approximately 5.5% of the purchase price to invest in renovations and amenity improvements over the next few years. Through our medium upgrades, we will raise rents an average of $115.
• Since our original underwriting in June, the property’s financials have continued to perform well. Average rents have increased by 3.85% at Basswood and 1.1% at Landmark Woods (respectively). Occupancy has also remained in the high 90%s for both properties.
• Landmark Woods and Basswood are centrally located between Fayetteville, NC, where our Regional Manager is based, and Gleneagle, our property in Columbia, SC. This proximity to our other assets gives us confidence that we will be able to hit the ground running operationally, avoiding hiccups that often occur during asset take-over.
• Landmark Woods and Basswood’s location within Florence is superb. Landmark is within 3 miles of Orange Theory, Florence Country Club, Magnolia Mall, Florence Mall and a Walmart Super Center. Meanwhile, Basswood is within 3 miles of Lowes Home Improvement, another Walmart Super Center and Friendship Park.
• While this is a split property portfolio, Landmark Woods and Basswood Apartments are only a seven-minute drive from each other, affording us economies of scale from a management perspective as we can run both properties out of Landmark Woods’ leasing office.
• The two properties also offer an attractive mix of floor plans including: 1bd/1bth, 2bd/2bth, 2bd/2bth + retreat and 3bd/2bth. *CoStar data

• Located in Leesburg, GA, Spring Lake is one of just three apartment communities located in Albany, GA’s most affluent suburb and strongest school district. Boasting Median Incomes of $72,374 and $49,443 in the 1- and 3-mile areas (respectively), Spring Lake is set to benefit from strong demographics in its desirable location.
• Our plan for the asset is to implement a systematic renovation program that will include what we designate as a “medium upgrade” (vinyl flooring, appliances, countertops, hardware, and cabinets on a case-by-case basis).
• Due to the property’s deferred maintenance and more extensive renovation needs, we have budgeted approximately 17% of the purchase price in expected capital expenditure for interior renovations and amenity improvements to invest in the property over the next few years to achieve our goals for this asset.
• The property offers an attractive floorplan mix of 1bd/1bths, 2bd/1bths, 2bd/2bths, and 3bd/2bths.
• Spring Lake Apartments is situated 7 minutes away from our Huntingdon Apartments (Sunbelt Fund I), where our GA regional manager is based. Due to our existing presence in the market, we have a strong grasp on what rents are achievable at the better-located and newer-built Spring Lake Apartments. Furthermore, because of the proximity to our regional manager, we have great confidence that we will be able to hit the ground running without some of the typical operational hiccups that often occur during asset take-over.
• Since underwriting, the property’s financials have continued to trend in the right direction: occupancy has risen from the low-mid 90%s to just shy of 100%, collections continue to remain strong, and the property continues to prove out new rental high-prints on current ownership’s partial renovations.
• Spring Lake’s location within the Albany MSA is superb: aside from the aforementioned superior school system as a result of its location in Lee County, Spring Lake also boasts proximity to a plethora of local and national food options, is located less than three miles from Walmart, Publix, and Phoebe Health system, and is less than a ten-minute drive from both downtown Albany and downtown Leesburg.

• Coleman is located just minutes from premier retailers like Sam’s Club, Best Buy, Target, Dick’s Sporting Goods, and Publix, and dining such as Chick-fil-A, Dunkin’, Panda Express, Five Guys, Moe’s, Olive Garden, and Longhorn Steakhouse. Additionally, the location offers convenient access to Jacksonville State, the Quinard Mall, and the Exchange. Anniston is almost equidistant to both Birmingham AL and Atlanta GA and commutable to both.
• Along with the increase in revenue, we are set to benefit from a 2+ year repositioning effort started by the prior owners. At the time of prior ownership’s take-over, the average rents were in the $500s, the property had a bad reputation in the area for rude management and poor maintenance response times, and much of the resident base was non-paying. After cleaning house, rebranding the property, and hiring competent management and maintenance personnel, the property has increased average rents to the low $700’s, boasts strong Google and Apartments.com reviews, and is recognized as the nicest community in the immediate area.
• Coleman Place’s location features strong 1- and 3-mile annual median incomes (“AMI”) despite being located in a tertiary market in Alabama. Coleman Place’s 1-mile AMI is $53,628 and the 3-mile AMI is $38,788.
• At the time of first pass underwriting in early November 2020, the property’s average trailing-12 (T12) month income was $55,755 while the average trailing-3 (T3) month income was $67,335, a 20.7% increase. Recognizing and capitalizing on this trend, a trend driven by an improved occupancy and collections, we underwrote to this higher level while keeping a close eye on the collections during the initial stages of our contract period. By February 2021, the property’s average T3 revenue had risen to $70,160, a 4.2% increase from the prior T3 level or a 25.8% increase from the initial T12 level. By identifying the positive trend, we were able to acquire the asset below where it would have traded this Spring 2021.

• Much like our purchase of Holiday Cove in Forsyth, GA (Sunbelt Fund I), part of our thesis for the success of this acquisition is the critically low supply of market-rate multifamily housing in the Moultrie, GA market. While Moultrie is a small town with a MSA population of 45,600, the entire market has a total of four market-rate apartment complexes (including Georgetown), totaling 298 apartment units. Due to the critical shortage of supply and the fact that we are acquiring Georgetown at approximately 1/3 of the current cost of construction, we see immense upside in the future of the community.
• Georgetown Apartments is in great physical condition, as current and prior ownership have spent a good deal on deferred maintenance, leaving the income-boosting value-add spend for our ownership period. The entire property was re-roofed in 2016, the parking lot was resealed-restriped in 2015-16, and 1/3 of the property’s HVACs have been replaced over the past 3 years.
• The property features a strong track record of high physical occupancy and collections; current ownership has averaged more than 98% occupancy and less than 1% bad debt over the past few years. While this means that we are not only taking over an asset with an exceptionally good resident base, but the high occupancy also indicates that there is ample room to push rents.
• Georgetown’s location within Moultrie is superb: the property is located less than a mile from Chic-Fil-A, Wal-Mart, Walgreens, and Tractor Supply Co, and is less than 3 miles from Home Depot, Lowe’s, Starbucks, Publix, downtown Moultrie, and the city’s other major retailers, restaurants, and attractions.
• Moultrie’s location in South Georgia is well situated for our operational and management teams, at the mid-point between Albany, GA, and Valdosta, GA. Our Georgia regional manager is based in Albany at Huntingdon Apartments (Sunbelt Fund I), and is frequently in Valdosta to oversee our team at Amelia Apartments (Sunbelt Fund I) and Amelia West (Sunbelt Fund I).

“The communication and reporting is excellent. Getting monthly updates property by property on occupancy levels and income, as well as commentary on maintenance and upgrades has been so reassuring. I feel like I know exactly what’s going on in the portfolio at all times.”

— Sunbelt Fund I Investor

Important Disclosure