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Industry

Real Estate

Company Type

Small Multifamily Aggregation

Size

$25 Million

Investment Type

Equity

Overview

 

Terra Capital is seeking $25 million of equity to expand its highly successful value-add, small multifamily property aggregation strategy

Focus on sub-20-unit properties in high-growth midwestern markets, including Pittsburgh, Columbus and Indianapolis


Often overlooked market segment with few institutional owners


Seek to aggregate unlisted, value-add properties, renovate and sell as a portfolio thereby “institutionalizing” lower middle market real estate


Operating cash-on-cash returns were 15% across 20 stabilized properties in 2023 (detailed financial information available upon request)

Opportunity

 

$5 Trillion US Asset Class

 

Terra is targeting a $5 trillion US asset class comprising 25.5 million units with extremely little professional competition

 

Small multifamily properties (under 50 units) make up 80% of the US multifamily market


Only 7% of small multifamily properties are owned by institutional investors compared with 41% for larger multifamily

 

 

 

 

Target Markets

 

Target markets share several attractive characteristics:

 

Less competition – management is unaware of other institutional real estate platforms with a strategy similar to Terra Capital’s in its target markets – mostly “mom and pop” operators


Favorable costs – management is finding plenty of inventory not “picked over” over by larger competitors, construction labor is available at a reasonable cost, more landlord-friendly laws, higher yields – cap rates tend to be in the 6.5%+ range versus a national average of about 5%


Management is finding numerous value-add opportunities – aesthetically pleasing townhomes and Victorian-style buildings with “good bones” in need of renovation

 

Solution / Strategy

 

Buy a series of sub-20-unit residential buildings, at attractive prices

  • many small multifamily properties require significant renovation, precluding many potential buyers
  • send approximately 4,500 outbound touches a week to mini-multi property owners via email, phone calls, and cold calls

Renovate properties to be “top of the market” quality


Sell portfolio of properties – patient exit strategy based on carefully monitoring market conditions to optimize results

 

Management

 

Tom Higgins| Managing Partner


  • Over ten years in real estate development, investing and brokerage, operations and construction management. Developed over 2,000 units
  • Worked previously at Lennar, Rose Associates, Silvershore and Brown Harris Stevens in a variety of roles, acquiring multifamily properties, sourcing land, developing and redeveloping properties and selling condominiums
  • BA, Economics and Philosophy, Columbia University

 

 

 

Ray Heimann | Managing Partner


  • Over ten years in real estate, private equity and investment banking
  • Responsible for acquisitions, deal structuring and portfolio management
  • Previously worked at Sverica Capital (closed over $750 million of acquisitions), Booz & Company (consulted on over $3.5 billion of corporate transactions)
  • Also worked in investment banking at JP Morgan managing US REIT clients. BA, Mathematics and Philosophy, Columbia University

 

 

 

Learn More About Terra Capital
Thank you for your interest in Terra Capital.Please fill out your information and we will contact you shortly with more information on this opportunity.

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CONTACT US

Hi. We're not around right now. But you can send us an email and we'll get back to you, asap.

Thanks, Ken

Ken Margolis | Managing Partner Castle Placement, LLC
1460 Broadway Street, Rte 400
New York, New York 10036
(212) 418-1188 | C: (516) 712-7784
kmargolis@castleplacement.com

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