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Neglected to Prime: Danziger Str.

ADDRESS	UNITS	FLOOR SPACE

PURCHASE DATE	SALE DATE	PURCHASE PRICE	SALE PRICE	REALIZED RETURN

Past performance and statements regarding earnings are no guarantee of future results.

Realized return

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Units
Floor Space
Purchase Date
Sale Date
Purchase price
Sale Price
Realized Return

Why we invested

Danziger Straße is a well-known thoroughfare (and Bundesstraße 96) that runs through one of Berlin’s most sought-after neighborhoods, Prenzlauer Berg.

With an oulook at the famous TV Tower at Alexanderplatz, we were offered an ensemble of 50 apartments and a retail store in a new building and a typical Berlin garden house with corresponding side wings in this then and still popular trendy district.

Opportunities and challenges

Since 2012, prices had already risen rapidly in this location. Due to the city’s continued growth, we were aware that massive value increases were still possible here almost on a monthly basis.

The previous owner had managed both the property and the rentals in a state of disarray that we had never seen before. The mailboxes were partly misused as fictitious addresses for criminal activities, conflicts smoldered even among the tenants, and garbage from all possible tenants accumulated in the courtyard.

Some tenants had not paid rent in a long time and were under the impression that they could continue this practice.

The two-decade-old, moderately constructed new building suffered from moisture damage, both on the façade and in the basement.

The property presented a significant challenge due to its neglected state, tenant problems, and structural issues. However, its prime location in a popular district with strong market growth potential offered the prospect of substantial value appreciation through renovation and professional management.

Results

A Tale of Speed and Targeted Marketing

This project’s success hinged on a strategic combination of swift execution and targeted marketing. While our rental consulting team navigated legal and financial aspects, handled tenant terminations, and resolved conflicts, we simultaneously coordinated with various trades to renovate the building and vacant apartments as quickly as possible.

We ventured into uncharted marketing territory, directing traffic from major real estate portals to a custom-designed website featuring detailed property descriptions, floor plans, and continuously updated photographs.

This strategy revealed a significant demand from West Germans and Europeans seeking homes for job relocations or their adult children. These out-of-towners, drawn by the prime location and first-occupancy status, were willing to make pricing concessions.

As a result of our synchronized efforts, the time between completion, listing, and buyer reservation was reduced to a remarkable 10-14 days.

The installation of additional balconies on the historic garden house undoubtedly represented the most challenging phase of the entire project. The approval process alone proved to be extremely complex and time-consuming. For the actual installation of the balconies, it was essential to have Danziger Strasse temporarily closed.

This was necessary as the components had to be lifted over the front building using a crane. Since Danziger Strasse is a federal highway, approval for the measure lay not with the local authority but with the responsible state authority.

Despite an additional investment of approximately half a million euros, within 18 months, we not only established a vibrant, international community of residents from countries like France, Sweden or Italy, but also achieved a near doubling of the investment. Moreover, we left behind a transformed piece of Berlin.

West River Flats

ADDRESS	PURCHASE DATE	SALE DATE	AVG. RENT AT PURCHASE

AVG. RENT AT SALE	RENT INCREASE	NOI	IRR REALIZED

Past performance and statements regarding earnings are no guarantee of future results.

At a glance

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Rent Increase

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Net operating income

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IRR Realized


Purchase Date
Sale Date
Avg. rent at purchase
Avg. rent at sale
Rent increase
NOI
IRR realized

Why we invested

West River Flats challenged us on even different levels than other projects. Intrigued by the relatively good state of the 135 apartments, we had to deal with a few situations uncommon to our usual work.

Opportunities and challenges

Being conceived during the COVID crisis, it became troublesome to meet lenders in person and secure financing.
The previous owner had maintained a relatively high state of renovation. Kitchens were mostly renewed, had black appliances, granite countertops, shaker cabinets, tile flooring, and shiplap siding.
Regarding rent-increasing amenities, a swimming pool put West River Flats well above average.
While the treatment of the premises was rather diligent, the administration lacked discipline and sustainability. We found a significant amount of back rents as well as unoccupied apartments.
It became obvious that marketing and management would be crucial to success here, where usually building measures are needed in advance to release a project’s potential.

Results

Although circumstances were unusual, we managed to acquire West River Flats in November of 2020.

Aside from our regular activities to improve the premises as a whole, we set our focus on marketing the vacant apartments since their state was flawless.

After circa six months, every single apartment was rented out, already improving the cash flow greatly while several apartments were renovated in a higher standard.

Further Improvements like the remodeling of the exterior walls along with considerate management allowed us to increase rent for current tenants, further improving revenues.

Our effective and enduring improvements lifted revenue expectations greatly, thus enabling us to yield a greatly increased sales price. In a short 18 months, the asset exceeded the proforma estimates and the property was listed for sale well ahead of schedule.

Sabal Palm Portfolio

ADDRESS	PURCHASE DATE	SALE DATE	AVG. RENT AT PURCHASE

AVG. RENT AT SALE	RENT INCREASE	NOI	IRR REALIZED

Past performance and statements regarding earnings are no guarantee of future results.

At a glance

+0%

Rent Increase

+0%

Net operating income

+0%

IRR Realized


Purchase Date
Sale Date
Avg. rent at purchase
Avg. rent at sale
Rent increase
NOI
IRR realized

Why we invested

The Sabal Palm Portfolio with its 127 apartments was one of our larger projects, consisting of seven separate properties located along 4th Street South, distributed over a quarter mile.

The opportunities of this project were striking but not easy to implement.

Opportunities and challenges

As it is often the case with opportunities, they come as a blessing in disguise, meaning the premises and apartments were gravely neglected.
As a consequence of mismanagement, a noteworthy number of residents had started to withhold rent payments.
A fraction of the apartments were already untenable.
The community was demoralized with police being present almost daily and may tenants had given up on it as well as prior management.
Still, we were aware that the ensemble was very close to bustling Downtown St. Petersburg with many attractive places of work.
Since the entire package represented 75% of the neighborhood, we felt optimistic to make a real change.

Results

During our previous projects we had recruited our own team of craftspeople instead of relying on third party contractors, giving us the manpower a project like this needed.

Once again we commenced the renovation of dozens of apartments while sorting out which tenants to keep and which could not be kept any longer.

Our investors were not the first to appreciate our work as only two months into the project, local police forces visited our property manager to state the drastic reduction of police operation on the premises.

Within 17 months, the majority of the apartments were renovated. Almost every facade was refaced and various roofs exchanged.

Aside from impressive returns and satisfied investors we were once more able to keep our promise to leave an intact and viable quarter to hundreds of people in the heart of St. Petersburg.

Altura Largo

ADDRESS	PURCHASE DATE	SALE DATE	AVG. RENT AT PURCHASE

AVG. RENT AT SALE	RENT INCREASE	NOI	IRR REALIZED

Past performance and statements regarding earnings are no guarantee of future results.

At a glance

+0%

Rent Increase

0%

Net operating income

+0%

IRR Calculated


Purchase Date
Sale Date
Avg. rent at purchase
Avg. rent at sale
Rent increase
NOI
IRR realized

Why we invested

Altura Largo, consisting of 232 flats had an intriguing past. The previous owner intended to merge the condominiums and convert it into a single property in order to resell it.

After having bought the majority of the apartments already, the investor acquired more and more condominiums from their respective owners.

Opportunities and challenges

Solely focused on the idea of creating an easy fungible package of condominiums, maintenance was not taken care of. 838 complaint tickets were unprocessed.

Consistently, not only the interior of the apartments lacked maintenance, the entire premises needed substantial renovation.

We found several obvious improvements which would lift the overall appearance of the estate.

As in almost every project, communication with the tenants was crucial in order to clear doubts in the new management and to cement new hope.

Results

During the first three weeks, we took great effort in addressing the many complaints, order them by priority and send in our maintenance technicians.

We had to replace more than 40% of the roofs. After having dealt with these pressing matters, the facades were renewed and new balustrades and blinds were installed on the balconies. During the first year, the majority of the apartments were completely redone.

The bathrooms received water saving toilets and armatures to save water as well as running costs.

The maintenance office was also refurbished in its entirety to create a contact point for our tenants.

Later we laid our attention to energy savings by replacing all windows with modern and energy efficient windows.

A fitness center for the tenants is due to be opened in early 2023.

We are very proud to have proven that we were able to manage a project with more than 200 tenants and apartments once given the chance. The realized rent increases is as satisfying as the many pleased people living at Altura Largo.

Madison at 4th

ADDRESS	PURCHASE DATE	SALE DATE	AVG. RENT AT PURCHASE

AVG. RENT AT SALE	RENT INCREASE	NOI	IRR REALIZED

Past performance and statements regarding earnings are no guarantee of future results.

At a glance

+0%

Rent Increase

+0%

Net operating income

+0%

IRR Realized


Purchase Date
Sale Date
Avg. rent at purchase
Avg. rent at sale
Rent increase
NOI
IRR realized

Why we invested

“Madison at Fourth” comprising of 21 apartments was Whitestone’s second project. While we are primarily focused on great investments to create great homes, in this project we also relieved an overburdened owner.

Opportunities and challenges

The premises had not been maintained for a long period of time. The decay was so advanced that some apartments could not even be rented out anymore.
The present tenants were left discouraged and frustrated by their former landlord, thus treating the premises with little respect also.
Because of the lax management, payment practice had also lowered over time, burdening the low cash flow even more, giving us the opportunity to part ways with conflicting tenants.
The owner was ready to sell the premises on progress payment with an owner financing, allowing us to only refinance a fraction of the asking price, recouping the unpaid balance while and by improving the housing estate.
Our analysis conducted that severe investing would be needed to renovate the building’s face and roof as well as the apartments themselves but that the estimated rent increases would outweigh these investments by far.

Results

After becoming familiar with the tenants, we were able to establish our common goal to create a better place to live for everyone involved and embarked the voyage to a “new Madison” together.

The facade was renewed and the roofs were rebuilt in their entirety.

We also renovated every single inhabited and vacant apartment within a few months, thus assuring that renting out could start as early as possible. That was another opportunity to proof to ourselves our ability to act very quickly whenever needed.

We also installed a new fire alarm system in increase the overall feeling of safety.

We and our investors were very pleased with our results in rent increases as well as the sale price two years after our acquisition. This encouraged us further to apply our concept to more and larger projects.

Wildwood Way Villas

ADDRESS	PURCHASE DATE	SALE DATE	AVG. RENT AT PURCHASE

AVG. RENT AT SALE	RENT INCREASE	NOI	IRR REALIZED

Past performance and statements regarding earnings are no guarantee of future results.

At a glance

+0%

Rent Increase

+0%

Net operating income

+0%

IRR Realized


Purchase Date
Sale Date
Avg. rent at purchase
Avg. rent at sale
Rent increase
NOI
IRR realized

Why we invested

“Wildwood” was Whitestone Capital’s first endeavor. We saw an immense potential for rent increases the previous owners neglected.

Wildwood way was the perfect ground for our company to proof our concept to ourselves and our first investors.

Opportunities and challenges

The premises were in a rather good condition that did not require substantial renovation. In fact, we were surprised the property was for sale – its potential seemed almost too obvious.

When interviewing the tenants we sensed tensions with some of the residents which was troubling and needed attention. Our managers had to mediate some conflicts, showing and challenging our social skills.

Some of the apartments had not been renovated in a long time, giving us the chance to offer renovation against an increased rent.

We found several obvious improvements which would lift the overall appearance of the housing estate.

Results

We immediately took care of the tenant management. We held meetings with tenants as well as in groups as face to face. Our professional yet friendly appearance helped to restore an agreeable atmosphere for everybody.

This did not keep us from evicting a small number of tenants who were notoriously disturbing the peace.

Whenever lessees did not continue their contract with us, we took the opportunity to renovate the respective apartment, setting a new standard for Wildwood Way.

We also reconstructed the entire roofing, installed an attractive outdoor lighting as well as a video surveillance system for everyone’s safety and peace of mind.

Within about 40 months, we were able to hand over a well run apartment complex to a grateful buyer, paying a markup of 26%, proving the “Whitestone way” is a success and giving us the first entry in our track record.