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DLP Preferred Returns Equity Fund
DLP Preferred Returns Equity Fund
Our PurposeOur Purpose is Dream. Live. Prosper. Passionately Creating Prosperity through Real Estate. DLP Capital Partners puts this purpose into action by focusing on connecting capital with real estate opportunities. This, in turn, creates solutions for two sets of DLP clients:
DLP Capital Partners is a private investment group designed to produce consistent, high-yield returns while providing liquidity and security to its investors. We leverage the holistic resources of the DLP family of companies, provide years of countless experience, and have hundreds of successful investments in the distressed and value-add residential and multi-family real estate space. We offer some of the most attractive investment options, not only in the real estate industry, but in the broader alternative investment spectrum as well. We focus on income-producing real estate-backed debt and equity investments.
Active Real Estate Investors: DLP Capital Partners provides a capital source for DLP Real Estate Partners and for seasoned real estate investors who have the knowledge, ex-
perience, and resources to capitalize on residential, income producing, and distressed real estate opportu-nities. These investment opportunities often demand quick, decisive action and typically are only available to cash buyers who do not need to rely on conven-tional bank financing. Today’s real estate market opportunities are substantial for both DLP Capital Partners investors and others who have access to capital and are able to execute.
Passive Capital Investors: DLP Capital Partners’ investment funds produce returns many times that of today’s low interests rates by investing in active investor debt and equity
opportunities, while generating consistent high-yield returns that provide liquidity and security. There has been a significant void and need for investments that can provide consistent, predictable, high-yield returns for the better part of the past decade. This has lead many investors in search of alternative investment op-tions. DLP Capital Partners’ debt and equity investment vehicles provide the return, risk profile, and liquidity that investors are searching for.
DLP CAPITAL PARTNERS
The DLP Preferred Returns Equity Fund, LLC is DLP’s third real estate equity fund to date. With this unique fund, all of the Fund’s investments will be in a preferred position, either as preferred equity with common equity invested “behind” the Fund’s investment, or as a loan with equity invested “behind” the Fund. In both instances, the Fund
gets paid on a preferred basis with the common equity being subordinate to the Fund. The second unique feature of this Fund is redemptions. Investors may redeem out of the Fund at any time during the life of the Fund with 180 days notice. Investors will receive the lower of the prevail-ing unit price or a 12% IRR upon redemption.
Risk Disclaimer: Investing in private real estate funds and notes secured by real estate has certain inherent risks, which could result in the loss of some or all of your principal investment. Your decision to purchase and invest should be based on your own particular financial circumstances and investment objectives. DLP Capital Partners LLC, its officers, and representatives can in no way guarantee or warrant your success. Consult your tax advisor or financial advisor before investing. Past performance does not guarantee future performance. Please see fund offering documents for full details & disclosure. *Funds are deployed on a first come first serve basis. No returns are paid until funds are deployed.
DLP Preferred Returns Equity Fund, LLC | Equity Offering12% Annual Returns
The Equity Offering is designed to provide 12% annual returns net to investors while providing liquidity and quarterly distributions.
Fund Type Real Estate Preferred Equity
Fund Investments Preferred Equity Investments into Multi-Family Communities
Direct/Indirect Security Preferred Equity Ownership in Real Estate
Fund Term 5 - 8 years
Distributions Preferred return quarterly, EDC paid quarterly
Targeted Distributions 8% during investment period and remaining profits paid at redemption or wind-down
Preferred Return 7%
Targeted Annual Return Net to Investor 12%
Management Fee 1.5% *Subordinate to preferred return
Return Split 80% Investor/20% Manager
Redemptions 180 days redemption notice
Benefits of Leverage Yes
IRA Investment Option Yes
Invest Through Brokerage Account Yes
Tax Shelter through Depreciation Yes
Minimum Investment $500,000 inclusive of investments in other DLP Funds
Target Fund Size $100,000,000
Accredited Investors only*
DLP PREFERRED RETURNS EQUITY FUND, LLC
*Accredited Investor Definition: For an individual to be considered an accredited investor, he or she must have a net worth of at least one million US dollars, not including the value of one’s primary residence or have income at least $200,000 each year for the last two years (or
$300,000 together with his or her spouse if married) and have the expectation to make the same amount this year.
Multi-Family Value Add Investing: Investment StrategyDLP Capital Partners focuses on investing both equity and debt, in undervalued distressed real estate assets with opportunities to add value. These assets are primarily multi-family communities. Our strategy has been tested, proven, and modified over the past decade and has been utilized to complete more than 2,500 real estate acquisitions.
Multi-Family AcquisitionDLP acquires value-add B and 200+ unit multi-family communities primarily throughout secondary and tertiary markets. These acquisitions are mainly located in the southeast. DLP’s strategy is to add value through strong management, physical improvements, or both. Typically, the objective is to stabilize the property within 3-15 months and then hold the asset for a subsequent 5+ years.
Our Locations
WHY MULTI-FAMILY?
We focus our investments in multi-family and residential income-producing properties, ensuring strong management to produce consistent double-digit monthly cash flow. We believe that apartments and residential homes provide consistency and stability even when the market is in a recession; especially when purchased at distressed or undervalued pricing. We focus on buying properties that we project will be able to generate 12%+ annual cash-on-cash returns within 15 months of acquisition. Nationally, rentership is on the rise, homeownership is on the decline, family formation is happening later in life, and those who do buy a home are doing so later in life.
Why Class B and C Multi-Family?We primarily focus on Class B and C multi-family properties. Class B and C refers to properties that are not “luxury” in quality. Typically built prior to the early 2000’s, these properties do not have the amenities of newer communities and usually command much lower rents. We focus on these assets for a number of reasons:
Cash flow. Typically Class B and C properties sell at significantly higher cap rates and better cash-on-cash returns than Class A properties.
Supply and demand. Class B or Class C products are not being built. Instead, there is currently a concentration of high-end, luxury apartment developments underway. In many markets, the average 1-bedroom rent is $1,500-$2,000 per month, while the average 1-bedroom rent in a Class B/C community ranges between $650 and $900 per month. In addition to little new inventory, there is a growing demand for affordable housing.
Declining market protection. We believe that in a re-cession people will still need a place to live and that many people living in Class A communities will be forced to move to Class B or C communities. We anticipate occupancy will remain strong in a recession.
How We Mitigate RiskDisciplined Buying
The demand for apartment communities is very high. Investors are often willing to pay low 5’s to low 6 cap rates for Class B and C communities. Bidding frenzies can make it easy to get caught up in “the market” and over-pay, even for sophisticated institutional quality investors who are consistently being outbid by other investors. Our discipline ensures we never get attached to a deal. We also believe in a conservative investment approach to factors we control and even more conservative in the expectations we do not control such as interest rates, rent growth, etc. We believe that when we buy assets that generate strong double-digit cash flow based on current market rents, we will be in the best position to weather market changes.
Strong In-House Management
DLP Real Estate Management provides DLP Capital Partners with the significant advantage of having a topnotch, in-house management team whose interests are aligned with investors and the Fund. DLP Real Estate Management has been able to drastically beat industry benchmarks in terms of physical occupancy, effective occupancy, tenant retention, and collected revenue. Long-term, Non-recourse Debt
A key factor in real estate investments is the utilization of debt. DLP focuses on utilizing debt in a relatively conser-vative manner, typically with a maximum leverage of 75% of costs at the time of purchase. As a whole, DLP’s real estate holdings have an LTV of about 55%. In addition to utilizing leverage conservatively, DLP focuses on locking in long-term debt with no recourse to investors. This allows cash flow and investor returns to have no direct effect from rising interest rates.
WHY WE INVEST EQUITY IN MULTI-FAMILY PROPERTIES
We focus primarily on income producing multi-family properties in secondary & tertiary markets with strong job and population growth.
Multifamily Acquisition Criteria:
Multi-Family Asset Class: ..................................B & C 200+ UnitsSituation: ...........................................................................Value-Add Price Range: .....................................$10,000,000-$50,000,000Number of Units: ................................................................100-400Markets: ........................... Southeast, Northeast, & Midwest U.S. Primary Focus: AL, FL, GA, MS, NC, PA,SC, and VAAcquisition Cap Rate: ................................................................5%+
Pro-Forma Cap Rate: ..............................................................8.5%+Cash-on-Cash at Pro-Forma: ..................................................12%+Leverage: ...............................................................................65-80%Hold Period: ......................................................................... 3+ YearsIRR Based on 5-7 Year hold: ....................................................8%+Existing Occupancy: .............................................................0-100%Capital Improvements: .........................................$1-15k+ per unit
ACQUISITION PROCESS
300-500 deals reviewed each month
• Offering memorandums received• Deals are sent by sellers directly, brokers, other investors,
banks, and auctions (Tenx: Real Marketplace)• Initial analysis/evaluation done
40-50 deals per month are taken into full evaluation
• Financials analyzed and deal underwritten to our acquisition guidelines
• Rent rolls, operating statements, and leases• Investment analysis completed• CoStar underwriting reports pulled and valuated
($30,000+ per year data subscription with full insight on asset, market, and competition)
• Crime reports pulled
20-30 deals per month site visit scheduled
• Inspect 10-30% of the units and meet and evaluate the management team with the goals of evaluating the quality of asset, location, condition, screening processes, tenant quality, and management inefficiencies
• Inspect competitive communities with the goal of determining how the subject asset compares on location, condition, desirability, etc. and evaluate occupancy, rents, quality of management, etc.
15-20 offers submitted
• Full Offer Package sent offering strong straight forward offer with short due diligence period and proof of ability to execute
2-3 offers accepted
• Request all items on attached Due Diligence not already provided• Schedule In-depth site visit• Inspection of every single unit: photos, comments, and notes• Full lease audit with manager• Lease audit: evaluate all financials provided against the actual source
documents or leases• Stop at police station to get insight from police on community• Stop at codes offers to check on permits, violations, etc. • Submit Investment Package to lenders for proposal of terms• Finalize Capital Improvement Plan• Finalize rent projections and expectations• Title insurance• Insurance bids• Flood certification• Purchase excellent property, liability, and flood as needed• Renegotiate based on findings
1-2 offers that pass due diligence process
• 3rd party appraisal completed• Phase 1 report completed• Financing terms negotiated• Survey ordered• Asset onboarding booklet• On-site management and maintenance hired• Deal closed• On-boarding team on-site to transition the asset and on-site
management and maintenance team
Onboarding
• On-boarding team on-site to transition the asset and on-site management and maintenance team
• Distribute announcement to residents• Add property to website and sign up residents for online payment portal• Perform final lease audit and post close inspections• Change property name and replace signage
Throughout this process
• Weekly investment committees• We discuss: findings of each step through-out the process, evaluate any
red flags opportunities, and finalizing projections
300-500 deals reviewed each mont
40-50 deals per month are taken into full evaluation
20-30 deals per month site visit scheduled
due diligence process
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EQUITY INVESTMENT CASE STUDY
Property: Prosper Azalea City, a 300-unit multi-family property in Valdosta, GA
Description: The Prosper Azalea City (formerly Arbor Trace Apartments) is a 300-unit apartment community located in Valdosta, GA. The surrounding area includes multiple stabilized rental communities with high occupancy, a bustling commercial center, and several large employers. The community features a mix of 1, 2, and 3 BR apartments, many recently renovated and maintains a high effective occupancy (90%) and low operating cost. The rents at the community are under market by at least 15%, leaving room for an aggressive revenue strategy post close. At the same time, the community has been well-maintained and will not require significant capital improvement to bring rents to market rate. This makes it an extremely attractive investment opportunity for DLP.
Purchase Price: $11,392,500 Price Per Unit: $37,975 Equity Investment: $5,900,000
Unit Breakdown:
Financial Overview:
Unit Type # of Units SF In-Place Rent Pro-Forma Rent
1 bed / 1 bath 64 550 $537 $625
2 bed / 1 bath 164 900 $593 $686
2 bed / 2 bath 52 1,050 $678 $771
2 bed / 1 bath 20 1,230 $778 $876
Totals/Avg 300 262,000 $608 $700
Total Five Year Project Return: 23.7% Annualized IRR on an Asset Level
2.54x Investor Equity Multiple
Multifamily Properties
Prosper Gulfport Gulfport, MS426-unit apartment complex
The Views on Longcreek Columbia, SC419-unit apartment complex
Prosper Orange Beach Orange Beach, AL300-unit apartment complex
Foxgate Apartments Hattiesburg, MS304-unit apartment complex
Prosper Azalea City Valdosta, GA300-unit apartment complex
Laurenz PlaceSouth Bend, IN739-unit apartment complex
OUR MULTI-FAMILY PORTFOLIO
Prosper Jackson Jackson, MS280-unit apartment complex
Pinnacle West Apartments Albany, GA252-unit apartment complex
Hidden Oaks Apartments Albany, GA240-unit apartment complex
Warner Robins Warner Robins, GA196-unit apartment complex
The Village at Glenhaven Greenwood, SC199-unit apartment complex
Bellemont Victoria II Apts Baton Rouge, LA198-unit apartment complex
Lake of the Woods Apts. College Park, GA196-unit apartment building
Kensington Cottages Orlando, FL170-unit apartment complex
Park East I Apartments Baton Rouge, LA190-unit apartment complex
Magnolia Trace Apartments Florence, SC144-unit townhome complex
LIVE Golden Isles Apts Brunswick, GA128-unit apartment comple
PROSPER Spartanburg Apts Spartanburg, SC 176-unit apartment complex
Mountain Hollow Estates East Stroudsburg, PA139-unit townhome complex
Dream Space CoastTitusville, FL186-unit apartment complex
Bellemont Victoria I Apts Baton Rouge, LA195-unit apartment complex
DLP CAPITAL PARTNERS TEAM
Don Wenner – Founder and CEO [email protected] | office: 610.488.2375 | direct: 484.542.2868Don is the CEO & Founder of DLP Real Estate Capital, a family of companies that includes: DLP Capital Partners, Direct Lending Partners, DLP Realty, DLP Real Estate Management, and Alliance Property Transfer. Don is highly experienced in all facets of housing as well as his ability to scale companies through utilization of the DLP Elite Operating System, for which the company has been ranked in the Inc. 5000 Fastest Growing Companies in the US for 6 consecutive years. Since DLP’s founding in 2007, Don and DLP have closed more than 10,000 real estate transactions totaling more than $1.2 billion. Don has built a successful track record of generating profits in all market conditions and cycles. Additionally, he is ranked by The Wall Street Journal as one of the Top 15 Real Estate professionals in the country, including #1 in all of PA and NJ for the past 5 years in a row. With over $700 million in assets under management, DLP’s portfolio includes more than 9,000 apartments and homes located primarily throughout the Southeast and Northeast areas of the country, as well as a portfolio of real estate loans originated to active real estate investors.
Don studied Finance and Marketing at Drexel University.
Don, his wife, and their two young sons, reside in St. Augustine, FL near DLP’s Southern Headquarters and have a second home in the Lehigh Valley, PA, close to the DLP Northern Headquarters in Bethlehem. Don is active in his local church, is passionate about fitness and health, and reads several books each week. He spends most of his free time with his family enjoying many outdoor activities and discovering new places.
Mike Knehans | Director Of DevelopmentMike has over 20 years of experience and knowledge as an RIA and wealth management advisor. He is considered a veteran in the world of financial services. His tremendous experience will enhance how our unique fund and investment offerings can provide consistent returns of 8-13% annually with no losses,
and broaden our reach and partner network well into the future. Mike holds a Bachelor’s Degree in Business from Missouri Valley College.
Rich Delgado | Managing DirectorRich earned his Bachelor of Business Administration degree in Accounting from Iona College. Prior to joining DLP Capital Partners, he worked in the mortgage industry for 25+ years. Rich is passionate about building relationships and closing deals, particularly with complex transactions.
Larry Hickernell, Jr. Sr. Investor Success ManagerLarry is passionate about helping people create long-term wealth and prosperity through DLP Capital Partners investment and lend-ing opportunities. “DLP provides an incredibly unique and safe way to earn fantastic returns on their investments,” Larry says.
Robert Schimeneck Investor Success ManagerBob is passionate about doing what is right for his clients and strives to build long-lasting relationships with them. His drive to form relationships and dedication to follow through has propelled him into success. Bob attended DeSales University where he studied Finance.
Mandy Danish | Investor CoordinatorMandy thrives on the high-pace intensity of her job and is passion-ate about getting investors the information necessary for them to start earning returns on their investments. She tackles each day with a solution-focused approach. “The main focus of my job is transferring investors funds smoothly from one custodian to another even when road bumps and challenges occur,” Mandy says.
Elizabeth DeGroot Capital Coordinator and Office ManagerLiz has a passion for learning and has gained valuable knowledge in customer service and management through years of owning and managing different businesses. Her experience has given her the tools necessary to be a successful DLP team member. Liz attended
Rider University, studying accounting and marketing. She enjoys setting up her new home, spending time at the beach, going to the gym, and going to car races.
Daniel Cocchimiglio Portfolio, Fund & Treasury AnalystDaniel is driven to helping clients and colleagues, alike, succeed. This drive to help others succeed is rooted in his constant search for self-improvement. “I always strive to be the best at what I do and DLP does the same; never accepting anything less than greatness,”
states Daniel. He graduated from Albright College with a Bachelor’s degree in Finance.
Joanna Docherty | Fund Accountant Joanna is passionate about giving 100% towards her professional goals and enjoys the daily challenges she faces at DLP. She strives to live fully everyday.
Monika Zareba | Senior Fund AccountantMonika works hard to deliver quality work and feels that with a positive attitude, obstacles that seemed impossible, become challenges that can be overcome.
CONTACT US
Don Wenner | CEO [email protected] | o: 610.488.2375 | d: 484.542.2868
Robert Peterson | CFO & Partner [email protected] | o: 484.695.4004 | d: 484.241.4958
Barry DeGroot | SVP/Chief Legal Counsel & Partner [email protected] | o: 610.488.2375 | d: 215.589.5102
Mike Knehans | Director Of Development
[email protected] | o: 610.488.1081 | d: 904.236.5063
Rich Delgado | Director Of Development
[email protected] | o: 610.488.2375 | d: 706.223.0071
Larry Hickernell, Jr. | Sr. Investor Success Manager
[email protected] | office: 610.488.2375 | direct: 484.292.4781
Robert Schimeneck | Investor Success [email protected] | o: 610.488.2375 | d: 484.821.5878
Mandy Danish | Investor Coordinator
[email protected] | office: 610.488.2375 | direct: 610.365.1705
Elizabeth DeGroot | Capital Coordinator
[email protected] | office: 610.488.1170 | direct: 484.403.1422
