Heritage Apartments: An Example of a Successful EGCM Portfolio Investment
Every investor dreams of finding the perfect investment that will yield consistent cash flow, long-term upside, and withstand market downturns. In real estate, the key to success lies in finding properties in growing markets with strong populations and economic growth. This is where EGCM comes in - with a portfolio of diversified properties aimed to achieve just that. In this article, we take a closer look at one of their successful investments, Heritage Apartments, a 236-unit apartment community in Sterling, Virginia.
Heritage Apartments is a prime example of the kind of investment that EGCM strives for - an affordably-priced rental housing in a growing market. In 2020, EGCM invested approximately $16.3 million in the acquisition and renovation of the property, which was built in 1986. The previous owner had already renovated 79 units, and EGCM's business plan called for an additional $6.1 million to renovate the remaining units and improve the community's common areas. EGCM and their partner contributed a total of $18.1 million over the duration of their investment.
Why Heritage Apartments was a Successful Investment?
Several factors made Heritage Apartments a successful investment for EGCM.
Heritage Apartments is located in Sterling, Virginia, at the western end of the Dulles Technology Corridor, a major employment hub for defense contractors and tech companies. As tech companies continue to deepen their roots in Northern Virginia and contribute to the traditional, stable employment center created by the federal government, the area is expected to see ample room for growth in the coming years.
EGCM partnered with an experienced operator who currently manages a portfolio of roughly 10,000 units across the United States. Since their inception in 2004, they have purchased over 40,000 units valued at over $3.0 billion.
At the time of EGCM's acquisition, rent collections at Heritage Apartments were roughly 90%, generating consistent cash flow for the owners. Despite the negative impact of the pandemic on demand for apartments in major gateway cities, EGCM believed that over the long term, more affordably priced suburban submarkets like Sterling would remain supply constrained.
What was EGCM's total commitment to Heritage Apartments?
EGCM's total commitment to the property was about $18.1 million over the duration of their investment.
What was EGCM's business plan for Heritage Apartments?
EGCM's business plan called for an additional $6.1 million to renovate a portion of the remaining units and improve the community's common areas, of which EGCM contributed approximately $1.8 million and their partner contributed the remainder.
Why did EGCM invest in Heritage Apartments?
EGCM believed that Heritage Apartments was well-positioned not only to withstand a prolonged economic downturn but to potentially benefit from more permanent shifts in behavior that may result. The property was located in an excellent location, EGCM partnered with an experienced operator, and the property was already generating consistent cash flow at the time of their acquisition.
Heritage Apartments is a prime example of a successful EGCM investment in an affordably-priced rental housing in a growing market. The property's excellent location, experienced partner, and consistent cash flow made it a lucrative investment for EGCM.
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