Consulting – Vallejo Rent Loss

CASE STUDY

Challenges

Client purchased the non-performing loan secured by the subject property.

Prior to default there were two fires onsite months apart affecting roughly half of the units. The previous owner collected a settlement from the insurance company but did not use the money to renovate the property.

Client and current owner was negotiating with the insurance company regarding this payment, as well as the loss of rents due to the fires and subsequent renovation time.

Insurance estimates for rent loss were low and not reflective of market trends.

Solution

Using local and regional rent data for multifamily in the market, it was determined that both rents and occupancy increased dramatically between the incidents, completion of the renovations and stabilization. We provided an in-depth analysis of these figures, charting out 478 properties/17,203 similar units, as well as 5 specific and proximate comparable apartments. Additionally, we reviewed monthly occupancy and lease up of the property for the 18 month rehab period. We then subtracted actual rents collected from a notional stabilized subject property whose rents increased in-line with market trends. Rhenium staff presented these findings to legal counsel of the insurance company upon client request.

Institutional Execution Middle Market Focus