HLC Equity, a multigenerational real estate investment management company, has announced the sale of Toscana Apartments, a highly amenitized 192-unit multifamily community located in Carrolton, Texas, a flourishing sub-market of Dallas. HLC acquired Toscana, in 2017 for $13.25M and was able to exceed their original projections by delivering a 26%* net IRR to its investor partners and principals.
“When we originally purchased Toscana, we recognized the solid value proposition that the property offered given its strong location, and our ability to execute a value-add business plan. We are happy to have been able to deliver above market returns to our investors and to HLC Equity principals” said Daniel Farber, CEO of HLC Equity.
Upon acquiring the property, HLC Equity leaned into their 70+ year legacy of successful real estate investing and leveraged their direct-to-investor platform – HLC Direct – to generate a significant amount of investable capital. HLC Direct allows accredited investors to invest alongside HLC Equity principals in institutional level real estate investments which have historically delivered above average returns for the investment group. Investors who took part in Toscana experienced firsthand, the sizable financial upside of investing via HLC Direct.
“This is my second full circle deal with HLC Equity and both times they have far exceeded the initial return projections. Our experience investing with HLC Equity has been terrific. They provide consistent reporting and distributions, and we are very satisfied with the results. HLC Equity is unique in that their long track record and significant co-investment gives us confidence that we are investing alongside a highly professional group,” noted Joel J., an Executive in the Legal Services sector and investor with HLC Equity.
Toscana saw not only immense financial success but was also an operational powerhouse under the leadership of Dave Molitor, HLC Equity’s Head of Operations. Toscana’s average monthly occupancy rate was over 94%, including 99% at the time of sale. Rent growth rose 25% from acquisition to sale, while the price-per-door jumped over 84% during that same period. The results were both considerable growth in long-term equity, as well as critical monthly cashflow.
But this success didn’t come solely from the market – Molitor and team executed an intense and highly effective capital improvement program. The value-add included renovating over 25% of the units (generating $100+ rent premiums); installing low-flow water devices, reducing consumption by over 20% annually; resurfacing the pool and replacing all furniture; extensive landscaping and paving improvements; increased security by installing property-wide cameras and innovative access control via mobile app; and many other resident comforts and amenities.
Perhaps most notably, however, is that Toscana became the first property to implement Layers, HLC’s hybrid operating model offering both serviced and conventional apartments to the growing mid- to long-term rental market. HLC investors have come to value Layers properties due to the upside as well as its hedge against single offering apartments. At Toscana, the implementation of Layers yielded comparable occupancy (90%+), however generated a 20% net lift in rental revenue. Since Toscana, HLC’s other partner properties are also seeing Layers serviced apartments command significant premiums compared to traditional counterparts.
“Not only are we pleased to have exceeded our investment goals, but Toscana has also helped solidify the business case for our hybrid Layers model, showing that there is significant demand in the market for mid to long term serviced apartments in traditional multifamily assets,” remarked Farber.
HLC Equity’s portfolio remains strong in the Dallas Market, including a newly developed Class-A multifamily community called Southgate Apartments that HLC Equity acquired in Q2 of 2022.
“Dallas has consistently delivered strong returns and opportunity to HLC Equity and our investment partners and will continue to be a focal point as we look to acquire new properties and further expand our footprint,” added Farber.
HLC Equity sold the property to Beverly Hills-based Archway Equities, which was brokered by longtime broker partner Rob Key, JLL’s Managing Director of Dallas.
About HLC Equity (www.hlcequity.com)
HLC Equity is a multi-generational real estate investment management company, with over 70 years of experience and an expansive real estate portfolio. Their entrepreneurial spirit of a startup is juxtaposed with institutional level execution. HLC Equity utilizes its real estate portfolio to carry out its mission of building thriving communities. For more information, please visit www.hlcequity.com
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*Returns are unaudited