Walk-through of a $22M value-add acquisition in the Tampa MSA — a deal that illustrates the practical mechanics of value-add multifamily in a market where competition has repriced core returns but left value-add opportunities accessible to operators with discipline and execution capability.

The Deal

The asset: 184-unit garden-style multifamily built in 1987, located in the Tampa MSA's east submarket. The property had experienced deferred maintenance and below-market rents relative to comps. Acquisition price: $22M ($120K/unit). At 87% physical occupancy at acquisition with significant deferred maintenance.

## Deal Structure

The capital stack:

- Senior bridge loan: $14.3M (65% LTV), SOFR + 375 bps, 18-month term with extension options - Preferred equity: $4.4M, 14% current pay with equity kicker at exit - Sponsor equity: $3.3M

Total capitalization was consistent with value-add underwriting — the gap between senior loan and acquisition price was bridged with preferred equity rather than over-concentrating sponsor equity.

Renovation Scope

The business plan called for:

- Unit interior renovations: $8,500/unit for interior upgrades (new kitchen appliances, flooring, paint, fixtures) - Common area refresh: lobby, pool, and fitness center - Exterior deferred maintenance: roof repair, parking lot resurfacing, landscaping - Smart home technology installation: smart locks and thermostats in all units

Total renovation budget: $2.8M over 14 months. Rent premium target: $175/month per renovated unit.

Exit Underwriting

The exit scenario was underwritten to a stabilized value at a 5.0% cap rate on Year 2 projected NOI. At that valuation, the leveraged return to sponsor equity exceeded the underwriting hurdle.

## Realized Outcome

After 18 months of operation, the asset reached 96% occupancy with 60% of units renovated. Exit price: $27.5M at a 4.75% stabilized cap rate. Sponsor IRR: 28% on a $3.3M equity investment.

The case study illustrates that value-add multifamily remains a viable strategy in Florida markets — but requires disciplined underwriting, realistic renovation budgets, and a capital structure that can absorb execution risk.