Indy Town Apartments — 412-Unit Value-Add Multifamily Portfolio

Stabilization opportunity with significant operational upside, an assumable 2.81% Freddie Mac loan, and a discounted $62,621 per-unit acquisition price.

High-vacancy, mismanaged workforce housing portfolio with substantial value-add and operational upside. The assumable 2.81% fixed Freddie Mac loan provides rare high-leverage, low-cost debt.

Deal Snapshot

  • 412 units across four assets
  • $25.8M Purchase Price ($62,621/unit)
  • 2.81% Fixed Assumable Freddie Mac Loan
  • Total Equity: $6.7M | GP Co-Invest: $2.5M | Total Sponsor-Affiliated Capital: $5.5M
  • 28.43% Projected LP IRR | 4.14× LP Equity Multiple
  • 5–7 Year Hold | Refinance: Year 5 | Exit: Year 7

Applegrass principals are contributing $2.5M of direct GP capital. An additional $3M of sponsor-affiliated family capital is invested alongside LP investors, bringing total sponsor-affiliated commitment to $5.5M — representing 82% of total equity.



Presented by Applegrass Real Estate - Harrison Grass & Nathan Applebaum

Confidential & Proprietary - Not for Distribution


Executive Summary

A Compelling Operator-Driven Value-Add Opportunity

Indy Town Apartments is a 412-unit, four-property workforce housing portfolio located in East Indianapolis. We are acquiring the assets for $25.8M ($62,621 per unit) at a compelling 7.0% going-in cap rate, supported by a highly favorable 2.81% fixed assumable Freddie Mac loan—a rare combination in today’s capital markets.

The 7.0% going-in cap rate reflects seller-provided trailing 12-month actuals at approximately 100-unit vacancy. Current vacancy has since increased to 115 units under continued legacy mismanagement — reinforcing rather than undermining the value-add thesis.

For context, the current Indianapolis market cap rate is ~6.12%, making this a uniquely attractive basis opportunity.

The properties exhibit severe operational mismanagement: 115 vacancies, inflated expenses, low engagement with Section 8 despite overwhelming demand, and no functioning property-level systems, accountability, or controls.

Our strategy is a disciplined, operator-led turnaround: replace management, execute targeted renovations, stabilize occupancy, capture substantial rent premiums, restore expense efficiency, and unlock value through systemized operations.


Stabilized operations are projected to achieve a ~10% yield-on-cost in a ~6.12% market cap rate environment—creating material basis arbitrage, strong cash flow, and meaningful downside protection.

412

Total Units

Four-property portfolio

7%

Going-In Cap Rate

Based on T-12 NOI | Market cap rates ~6.12%

2.81%

Fixed Rate

Assumable Freddie Mac debt

Market Overview

Why Indianapolis?

Resilient Economic Foundation

Indianapolis is a diversified, fast-growing Midwest MSA with 2.14 million residents and ~10% population growth over the past decade, supported by logistics, advanced manufacturing, healthcare, and life sciences employers. FedEx operates its second-largest global hub in the city, joined by major anchors including Rolls-Royce, Eli Lilly, IU Health, Community Health Network, and numerous defense contractors.

GDP growth is forecast at 2.5%–3% annually, unemployment remains structurally low, and cost-of-living advantages continue to attract a durable renter base seeking quality workforce housing.

Landlord-Friendly Operating Environment

Predictable Property Taxes: Indiana's Circuit Breaker Law caps property tax at 2% of assessed value for rental properties, providing a structural ceiling on tax burden rarely found in gateway markets.

Stable Insurance Markets: Unlike coastal markets facing climate-driven volatility, Indianapolis maintains stable underwriting and predictable premiums.

Pro-Landlord Statutes: Efficient eviction processes and tenant accountability laws support operational discipline and collections enforcement.

The city’s ongoing transit investments and expanding employment corridors reinforce sustained demand for accessible, affordable workforce housing.

Indianapolis Market Fundamentals: Strong, Stable, Undersupplied MSA

Key MSA Indicators

  • Population: 2.1 million metro population, with ~10% growth over the past decade.
  • Employment Base: Anchored by logistics, life sciences, healthcare, advanced manufacturing.
  • FedEx Hub: 2nd largest FedEx global air hub drives major logistics & workforce housing demand.
  • Affordability Strength: Rents remain below 30% rent-to-income ratio for workforce households.
  • Historical Rent Growth: Consistent ~5.4% annual rent growth over the past 5 years.
  • Demand Stability: Workforce housing occupancy consistently 94%–96% metro-wide.

Why the MSA Matters

  • Predictable demand for Class B/C workforce housing.
  • Strong employer base supports a long-term renter pool.
  • Low volatility compared to coastal markets.
  • Highly resilient during economic downturns (strong 2010–2020 performance).
  • Ideal fundamentals for value-add execution and sustainable growth.
Portfolio Overview

Indy Town Apartments

A 412-unit value-add workforce housing portfolio across four communities in East Indianapolis, offering significant operational upside.

Geographic Cluster: East Indianapolis Submarket

All four assets are located within a 2 mile radius, enabling efficient oversight and shared staffing.

Rent Profile

Applegrass underwrites conservatively below submarket ceiling — see slide 10 for post-renovation targets.

Key Portfolio Data

  • Total Units: 412
  • Purchase Price: $25.8M
  • Asset Type: Workforce, Class C → B repositioning
  • Vintage: 1950s–1960s
  • Current Occupancy: ~72% (115 vacancies)
  • Section 8 Opportunity: 20–30% targeted mix (50,000+ voucher waitlist in Marion County)


Four Included Properties

  • Arlington Green
  • Greenway
  • Frederick Square
  • Glen Ridge

Investment Highlights

  • Significant rent-to-market and rent-to-FMR spreads across all floor plans.
  • 115 vacancies provide immediate revenue acceleration with minimal renovation.
  • Classic interiors with light-turn renovation scope (no heavy capex).
  • Large Section 8 waitlist supports rapid lease-up.
  • Consolidated footprint enhances operational efficiency and oversight.

East Indianapolis: High-Demand Workforce Submarket

Where the Portfolio’s Operational Upside is Concentrated

Geographic Cluster: East Indianapolis Corridor

All four assets are located within a 2-mile radius, enabling efficient oversight, shared staffing, and consolidated maintenance resources.

Location Highlights:

  • 10–12 minutes to downtown but outside premium rent districts → ideal affordability positioning
  • 5 minutes to the I-70 and I-465 interchange → consistently high leasing traffic
  • Proximity to major employers within a 15-minute radius: FedEx Hub (IND), Eli Lilly, IU Health, Cummins
  • Immediate access to bus lines, retail, groceries, and neighborhood commercial corridors
  • Submarket tenant base: service workers, logistics/transportation employees, healthcare support staff

Submarket Catalysts

  • Rent-to-Income Cushion at the Submarket Level:
    In$188M IndyGo Purple Line Major rapid transit investment improving connectivity between Downtown and East Indianapolis, boosting accessibility and commute efficiency for workforce tenants.

NEAR Indy Project Grant program helping police, nurses, teachers, and firefighters purchase and renovate homes directly west of the portfolio — improving neighborhood stability and long-term demand.

Irvington Revitalization Historic district just south experiencing strong commercial and residential revitalization, attracting new retail, dining, and young professional renters to the surrounding area.

6,500+ Logistics Jobs Close proximity to distribution centers, industrial employers, and healthcare anchors provides a durable employment base and consistent workforce housing demand.

Submarket Fundamentals

  • $58K median household income
  • 5.4% annual rent growth over past five years
  • 30–45 day lease-up velocity on renovated units based on local operator experience
  • Minimal new workforce housing construction supporting rent growth durability

This aligns directly with our targeted renter profile.

  • Service workers
  • Transportation/logistics employees (especially FedEx & airport corridor)
  • Healthcare support staff

East Indianapolis remains one of the most resilient workforce housing corridors in the city, with strong absorption, deep affordability, and limited downside risk.

Investment Thesis

Investment Highlights

1

Immediate Operational Upside

115 vacancies (28% portfolio-wide) with 70 nearly rent-ready units create substantial low-cost, speed-to-revenue opportunity. Fast turns accelerate cash flow.

2

Favorable Debt Structure

$21.4M Freddie Mac loan at 2.81% fixed rate, 30-year amortization with loan expiration in January 2031. High-leverage loan assumption is a rare advantage in today's market. Non-recourse structure with strong DSCR coverage protects downside.

3

Below-Market Entry Basis

All-in, stabilized cost of ~$69K/unit versus renovated comps trading at ~$90K/unit, providing meaningful basis arbitrage and exit value protection. Replacement cost exceeds ~$150K/unit, creating exceptional intrinsic value.

4

Deep Mismanagement = Value Creation

Absentee ownership, bloated payroll, <1% Section 8 utilization, no eviction enforcement, and deferred maintenance create clear operational value-add pathways. Significant rent headroom exists with Section 8 FMRs far above post-reno targets.

5

Strong Market Fundamentals

Indianapolis is a top-tier logistics and healthcare hub with pro-landlord laws, predictable property taxes (Circuit Breaker Law), and stable insurance markets. 2.14M MSA population, ~10% 10-year population growth, and ~5.4% 5-year rent CAGR.

6

Proven Operator Execution

Track record of improving occupancy and operational efficiency, complemented by a full-time onsite manager with recent successful vacancy reduction at a comparable Indianapolis property. Dedicated onsite staffing: manager, leasing agent, admin, maintenance supervisor, 3 techs.

Portfolio Location Overview — Indianapolis, IN

East Indianapolis Workforce Corridor

  • East Indianapolis workforce housing cluster within a tight 2-mile radius, located in a 2.14M-population MSA with ~10% 10-year growth
  • 5–12 minutes to major employment anchors: FedEx World Hub, Eli Lilly, IU Health, Rolls-Royce
  • Strong renter-demand corridors driven by logistics, healthcare, and blue-collar employment
  • Assets intentionally clustered to maximize management efficiency, lower operating costs, and streamline oversight
Demand Driver

Section 8 & Rent Strategy: A Four-Layer Opportunity

Close to 0% current Section 8 utilization → immediate operational upside.

Current ownership operates with close to zero Section 8 tenants, leaving one of the most reliable occupancy and revenue levers entirely unused. Our post-renovation target rents are conservative relative to both market rents and FMR ceilings — providing multiple layers of upside and full rent reasonableness compliance for IHA approval.

Voucher Demand Accelerates Stabilization

Section 8 FMRs confirm our post-renovation target rents are well within rent reasonableness thresholds, supporting rapid IHA approval and immediate lease-up absorption.

Guaranteed Income Reduces Delinquency

Housing Authority direct payments materially reduce bad debt, improve cash flow visibility, and lower the operational burden associated with collections.

Longer Average Tenancy

Voucher tenants statistically renew at higher rates and stay longer, reducing turnover, vacancy exposure, and renovation downtime.

Demand Far Outstrips Supply

Limited voucher-accepting supply on the East Side positions these assets for immediate absorption, accelerating lease-up across the 115 current vacancies.

Rent Hierarchy — In-Place vs. Target vs. Market vs. FMR

Applegrass target rents are underwritten conservatively below both market and FMR — providing meaningful headroom and strong rent reasonableness compliance.

Portfolio Composition

Portfolio Overview

412 total units across four adjacent properties, all within two miles of each other, enabling consolidated management, shared maintenance resources, and operational efficiencies. The unit mix is highly favorable for family-oriented, longer-tenancy renters.

1

Arlington Green

181 units | Built 1950
Avg Unit Size: 643 sf
Current Vacancy: 33.7%

Largest asset in the portfolio with immediate upside through occupancy stabilization and targeted renovation execution.

2

Greenway

96 units | Built 1962
Avg Unit Size: 775 sf
Current Vacancy: 32.3%

High vacancy rate creates a fast-track lease-up opportunity through management discipline and systematic unit turns.

3

Frederick Square

65 units | Built 1968
Avg Unit Size: 838 sf
Current Vacancy: 24.6%

Mid-size asset positioned for early-phase renovations given manageable unit count and strong quick-win potential.

4

Glen Ridge

70 units | Built 1952
Townhome Configuration
Avg Unit Size: 1,250 sf
Current Vacancy: 10%

Lowest vacancy and largest floor plans; strong demand from family renters seeking space and stability supports premium rent capture.

Unit Mix: 41 one-bedroom units, 371 two-bedroom units. This configuration supports longer-term family tenancy, reducing turnover frequency and associated costs.

CapEx Strategy: $2.0M Total Program (Interior + Exterior)

Immediate Interior Repairs (Day-1 Needs): $456,800

Focused on functional repairs needed to lease units and stabilize operations:

  • Down units
  • Updating of Common Spaces
  • HVAC failures & missing condensers
  • Vacant units requiring light-turn renovations
  • Trashouts & debris removal
  • Safety repairs (leaks, mold, windows, fire)
  • Appliances & misc.

(23% of total budget)

Exterior & Strategic Improvements: $1,543,200

Planned over 24 months:

  • Exterior beautification & landscaping
  • Asphalt and driveway repairs
  • Signage & branding
  • Exterior lighting & safety enhancements
  • HVAC upgrades (Greenway priority)
  • Roof repairs: Greenway ($20K) + Glen Ridge ($20K) (targeted spot repairs, not full replacements)
  • General curb appeal upgrades to support rent premiums

(77% of total budget)


The $2M CapEx program is designed for maximum NOI impact: immediate repairs accelerate leasing, while strategic exterior upgrades improve retention, safety, and long-term rent premiums.

The $2.0M CapEx program is funded through a combination of lender-required escrow accounts ($1.4M, released upon completion of priority repairs) and operating cash flow. Initial cash reserves of $435K plus monthly cash flow support approximately $1M of CapEx deployment within the first nine months — the asset funds its own renovation program.

Operational Stabilization Timeline (Months 1–24)

A structured execution plan aligning CapEx deployment with leasing velocity and NOI growth.

Phase 1: Day-1 Repairs & Turnovers (Months 0–3)

  • Stabilize operations & accelerate lease-up
  • Complete down units, HVAC, safety fixes, interior and exterior common spaces
  • Turn C-level vacant units
  • NOI impact: Rapid unit return to revenue
  • Lease-up begins immediately as units return to service

Phase 2: Interior Renovations & Lease-Up (Months 3–12)

  • Drive rent-to-market & FMR uplift
  • Renovate lightly-scoped units
  • Implement Section 8 integration (20–30%)
  • NOI impact: Strongest income acceleration

Phase 3: Exterior & Strategic Improvements (Months 6–24)

  • Enhance curb appeal & retention
  • Landscaping, signage, lighting, safety
  • HVAC upgrades (Greenway priority), targeted roof repairs (Greenway + Glen Ridge)
  • NOI impact: Higher renewal rates & rent premium

Phase 4: Full Stabilization & Optimization (Months 18–24)

  • Achieve stabilized NOI
  • Portfolio occupancy 90–95%+
  • Rents at market/FMR levels
  • Validate NOI for refinance/sale

Occupancy projections are based on a 10-unit per month renovation and lease-up cadence beginning in Month 1, offset by an estimated 20–30 eviction-related move-outs in Months 1–3. Net occupancy is projected to trough briefly in Months 2–4 before recovering sharply as renovated units return to service and Section 8 placements accelerate absorption. The 90–95% stabilization target reflects month 18–24 based on this cadence, with meaningful occupancy and cash flow improvement visible by month 6.

Current State

Current Operational State: Where the Value Is Created

The portfolio is not distressed real estate—it is a distressed operation. The underlying assets are fundamentally sound, but operational mismanagement has created significant value destruction. This is precisely where disciplined operator skill produces immediate, measurable results.

115 Total Vacancies (27.9%)

Minimal turnover effort. Units are often left full of tenant belongings and trash after move-outs, sitting idle for months with zero marketing or leasing activity.

Low Eviction Enforcement

Non-paying tenants have been permitted to remain without consequence, creating a culture of non-payment. However, only 9 units are currently delinquent — the primary value destruction is vacancy, not collections. Economic occupancy among occupied units is strong, confirming the asset's revenue recovery is driven by lease-up, not collections rehabilitation.

Zero Section 8 Utilization

Despite a long household waiting list and guaranteed rent payments, current ownership has made zero effort to integrate voucher tenants.

Bloated Payroll: $565K

Staffing costs far exceed operational needs, with no accountability, no KPI tracking, and no preventative maintenance or work-order discipline.

Deferred Maintenance

Roof leaks, aging HVAC systems, and inefficient boilers inflate utility costs. The landlord pays utilities for vacant units, compounding expense inefficiency.

No Leasing Systems

No proper active marketing, lead tracking, or tour scheduling. No CRM, no follow-up protocols, and no performance metrics—resulting in lost revenue daily.

The Opportunity: Turn Mismanagement Into Value

The underlying real estate is fundamentally sound—strong submarket, stable demand, favorable financing—the operational mismanagement provides a rare, high-certainty upside window. Every dollar of NOI improvement directly translates to asset value at exit.

Immediate Rental Revenue

Turn 75 light-renovation vacancies quickly to capture lost rent. Speed to market creates immediate cash flow acceleration with minimal capital outlay.

Heavy Renovation Program

Execute deeper renovations on 40 additional units to capture sustained rent premiums and reposition product quality for long-term competitiveness.

Market Rent Alignment

Phase in rent increases for paying tenants using low-turnover approach, bringing below-market units to competitive levels without occupancy disruption.

Expense Reset

Optimize payroll, repair leaks, convert utilities to tenant-paid where applicable, and implement preventive maintenance to restore industry-standard expense ratios.

Section 8 Integration

Stabilize collections, expand demand pool, and reduce delinquency by certifying units and building IHA relationships for voucher placement priority.

We unlock revenue quickly while systematically building long-term NOI growth and operational excellence. Each initiative compounds the others, creating sustainable value creation.

Value-Add Strategy

Renovation & Stabilization Plan

Renovation Velocity & Sequencing

We will execute a disciplined, cluster-based value-add program targeting 10 renovated units per month, balancing speed with quality control, renovation cost discipline, and occupancy protection.

01

Frederick Square + Glen Ridge

Initial focus on smaller properties for quick operational wins and revenue acceleration.

02

Greenway

Mid-phase execution leveraging stabilized staffing, proven workflows, and established contractor relationships.

03

Arlington Green

Final phase targeting largest upside opportunity once systems and team are fully optimized.

Renovation Scope

  • Kitchen cabinet refacing and hardware upgrades
  • New Energy Star appliances (bulk purchase pricing negotiated)
  • Luxury vinyl plank flooring replacement throughout units
  • Light plumbing fixture updates and electrical repairs
  • Fresh neutral paint and professional unit cleaning
  • Exterior cluster renovations and common area improvements

Turnover Strategy

Immediate eviction filings for all 9 non-paying tenants to restore accountability culture and signal operational discipline to the existing tenant base. Target a 45-day average lease-up cycle once units achieve rent-ready status. Aggressive marketing through IHA, online platforms, and local agency partnerships.

The renovation plan accelerates revenue capture while controlling vacancy exposure through phased, systematic execution and proven contractor management.

Operational Overhaul

We are replacing the entire legacy management structure with a proven, accountable team experienced in workforce housing turnarounds and high-accountability operations.

New Onsite Manager

Experienced operator with 20+ years managing Class B/C workforce assets, strong local market knowledge, and a track record of stabilizing distressed portfolios.

Leasing & Administrative Team

Dedicated onsite leasing agent supported by a full-time administrative coordinator to ensure daily tenant engagement, tour scheduling, renewal execution, and responsiveness.

3 Maintenance Technicians + Maintenance Supervisor

Full-time maintenance team including HVAC-certified techs and a supervising lead. On-call rotation provides 24/7 response coverage, preventive maintenance execution, and timely unit-turn capacity.

Right-Sized Payroll: $440K

Reduced from a bloated $565K legacy structure while increasing service quality, work-order throughput, and operational accountability.

Systems & Accountability

  • Daily work-order tracking via cloud-based property management software
  • Weekly KPI reporting: vacancy, delinquency, turns, leasing activity
  • Monthly financial reviews with GP oversight
  • Standardized vendor list vetted for cost control
  • Strict expense approval protocols and preventive maintenance calendar
  • Tenant communication systems to improve retention and satisfaction
Financial Summary

Financial Snapshot: Current vs Stabilized

Current Performance (T12)

$3.8M

Effective Gross Income

$1.8M

Net Operating Income

52.6%

Expense Ratio

28%

Portfolio Vacancy

Even under severe operational inefficiency, elevated vacancy, and low Section 8 participation, the portfolio still generates positive cash flow — demonstrating strong underlying asset fundamentals and downside protection.

Stabilized Target (Year 3)

$5.27M

Effective Gross Income

+38% revenue growth

$2.88M

Net Operating Income

+60% NOI expansion

45%

Expense Ratio

Industry-standard efficiency for stabilized workforce housing portfolios

7-8%

Portfolio Physical Vacancy

Market-level stabilization

Stabilized yield-on-cost of 10% in a ~6.12% market cap rate environment creates meaningful basis arbitrage and multiple exit pathways.

Expense Optimization Plan

Restoring industry-standard expense ratios requires targeted initiatives across all major expense categories. Each optimization directly improves cash flow and asset valuation at exit.

Property Taxes: ~$300K Annually

Verified with a local tax consultant. Indiana's Circuit Breaker Law caps property tax at 2% of assessed value for rental properties, providing a structural ceiling on tax burden.

Insurance: Stable at ~$260K

*Confirmed via broker quote

Unlike coastal markets facing climate-driven volatility, Indianapolis maintains stable underwriting.

Utilities: Significant Reduction

Repair major roof and plumbing leaks inflating water bills. Replace aging HVAC and water heaters. Utility costs reduced through enforcement of flat fee allocation based on occupant count, aligning tenant responsibility with actual usage and eliminating landlord absorption of preventable consumption.

Payroll: $565K → $440K

Eliminate redundant positions and right-size staffing to actual property needs (1 manager, 1 leasing agent, 1 admin, 1 supervisor, 3 techs). Improved accountability and systems enable better service quality at lower cost.

Marketing: Strategic Increase

Elevated initially to drive lease-up velocity, then normalized post-stabilization. IHA partnerships, digital advertising, and employer outreach accelerate occupancy gains.

Repairs & Maintenance: Front-Loaded

Spike in Year 1–2 for turnover and deferred maintenance catch-up, then normalize to preventative maintenance budget once stabilization is achieved.

Revenue Strategy

Rental Growth & Section 8 Strategy

Current Rents (Significantly Below Market)

Post-Reno Target Rents vs Section 8 FMR
• 1BR: $904 target vs $1,144 FMR
• 2BR: $1,126 target vs $1,342 FMR
Our target rents sit $96–$222/unit below market and $240–$416/unit below FMR — providing meaningful rent headroom and full rent reasonableness compliance for IHA approval.

75%

1BR: $745–$806

Market Range: $1000

80%

2BR: $850–$922

Market Range: $1,200

82%

Townhomes: ~$1,017

Market Range: $1,350

Renovated, rent-ready units in the immediate submarket command $1,150–$1,350 depending on size, finish quality, and unit configuration. Our renovation scope positions units competitively within this range.

Section 8 Integration Advantages

Section 8 Fair Market Rents frequently exceed prevailing market rents in this submarket, creating immediate rent upside without tenant price resistance or slower lease-up timelines.

Certify units for Housing Quality Standards (HQS) compliance

Ensure all units meet IHA inspection requirements for voucher eligibility.

Build IHA relationships for inspection prioritization

Establish property manager as preferred landlord to accelerate approval timelines.

Facilitate high-retention voucher tenancy

Longer lease terms reduce turnover costs and stabilize cash flow predictability.

Blend Section 8 + market-rate tenants

Diversified income streams balance occupancy stability with rental upside optionality. Target portfolio composition: 20–30% Section 8, aligned with lender guidelines for refinancing.

All projected returns reflect our conservative target rents. Section 8 integration accelerates lease-up, reduces delinquency, and provides guaranteed income.

Debt Structure

Assumable Debt Advantage

Loan Terms

$21.4M Principal

Freddie Mac multifamily loan with full assumability at closing.

2.81% Fixed Rate

Locked for full term—extraordinary rate advantage in current 6–7% environment.

30-Year Amortization

Amortizing payments through maturity.

2031 Maturity

Balloon payment due January 2031 — approximately 4.5 years from closing — providing ample time for value creation and exit optionality.

Non-Recourse

Standard carve-outs only; no personal guarantees required, limiting downside exposure.

DSCR Protection

DSCR RATIO

The assumable debt structure dramatically enhances cash flow, protects downside risk, and delivers ~380 bps of interest rate advantage (2.81% vs. ~6.5% market rates)—equating to millions in incremental NOI and exit valuation over the hold period.

Capital Stack

Total Capital Required

$28.1M

Total Sources

Purchase Price: $25.8M

Negotiated acquisition price for all four properties.

Closing Costs: $800K

Due diligence, legal, title, loan assumption fees, and transaction costs.

Capital Improvements/Operating Needs: $1.4M

$1.4M (lender-required escrow accounts; full $2.0M CapEx program funded through escrow releases and operating cash flow over first nine months — see slide 11

All sponsor fees (3.5% property management, 2.5% asset management) are reflected in all projected returns and IRR figures presented in this deck.

Sources of Capital

GP Co-Investment: $2.5M represents 37% of total equity, ensuring full alignment with LP investors and demonstrating conviction in underwriting, execution capability, and return projections.

Leverage at ~83% LTV on purchase price provides significant equity efficiency while maintaining strong DSCR protection due to the 2.81% fixed-rate assumption.

Valuation

Comparable Sales & Basis Advantage

Market Comparable Analysis

Renovated, similar-era workforce housing assets in East Indianapolis submarkets have consistently traded in the $85K–$95K per unit range over the past 18 months.

Recent comparable transactions include:
• Brookside Village (2022): 156 units, $90K/unit
• Eastgate Commons (2023): 228 units, $87K/unit
• Warren Park Apartments (2023): 184 units, $93K/unit

These assets reflect similar vintage (1950s–1960s construction), unit layouts, and submarket positioning achieved after renovation and stabilization.

Comparable transactions reflect 2022–2023 market data. Applegrass exit underwriting assumes a stabilized base of $90K/unit in 2026, appreciating at a conservative 3% annually — implying an exit basis of approximately $110K/unit at Year 7, consistent with projected NOI growth and submarket appreciation trends.

Our Basis Advantage

$69K

Our All-In Stabilized Cost Per Unit

$90K

Market Comparable Sales Per Unit

Exit Analysis

Exit Scenarios

1

Base Case Refinance (Year 5)

  • Stabilized NOI: $3.0M
  • DSCR-Based Loan Sizing: 1.25x requirement at 6.25% / 30-year amortization
  • Maximum Supportable Debt Service: $2.4M/year
  • Implied New Loan: ~$33M
  • Estimated Cash-Out Proceeds (after retiring ~$21.1M existing balance): ~$11.9M
  • LP capital returned at Year 5 while retaining asset for continued appreciation through Year 7 exit
2

Base Case Sale (Year 7)

  • Projected NOI: $3.2M (continued rent growth + expense optimization)
  • Exit Cap Rate: 6.75% (modest compression on stabilized asset)
  • Gross Sale Value: $47M
  • Net Sale Proceeds (after loan payoff): $20M
  • Attractive IRR with multiple expansion on stable cash-flowing asset
  • Exit cap rate of 6.75% is underwritten conservatively above current market rate of 6.12%, stress-testing returns against modest cap rate expansion.
3

Stress Case Sale (Year 5)

  • Conservative NOI: $1.8M (zero operational improvement from current state)
  • Stress Cap Rate: 7.5% (significant market dislocation)
  • Stressed Valuation: $24.0M
  • Net Proceeds (after ~$21.4M loan payoff): ~$2.6M
  • Even under a complete operational failure scenario, the assumable 2.81% debt basis protects against total capital loss

Under all modeled scenarios—including stress cases with limited operational improvement—the investment retains strong downside protection and multiple profitable exit pathways driven by assumable low-rate debt and below-market basis.

Investor Returns

Traditional LP Returns & Waterfall Summary

Aligned structure, conservative assumptions, and strong projected LP economics.

Traditional Investor Return & Waterfall Structure

  • Preferred Return: Traditional LPs receive a 6% cumulative, non-compounding annual preferred return on unreturned capital contributions before promote distributions.
  • Profit Sharing Waterfall: After the 6% Return, distributions are split 75% to Traditional LPs / 25% to Voting Member until Traditional LPs achieve a 15% IRR; thereafter, distributions are split 70% to Traditional LPs / 30% to Voting Member.
  • Sponsor-Affiliated Co-Investment: Approximately $5.5M of sponsor-affiliated and family capital invested alongside Traditional LPs.

Projected Investor Returns (Base Case | 6.75% Exit Cap)

Year 5 includes capital event proceeds (refinance cash-out)

Why These Returns Are Achievable

  • Conservative underwriting: Assumes 6.75% exit cap vs. 6.1% market comps.
  • NOI growth driven by operations, not speculation: Lease-up, Section 8 integration, rent-to-market spreads, and stabilized capex.
  • Low-rate assumable debt: 2.81% fixed provides ~380 bps of rate arbitrage and outsized equity returns.
Tax Benefits

Tax Efficiency & Depreciation Benefits

Unlock significant tax advantages through strategic depreciation, enhancing overall returns for investors with passive income to offset — subject to individual tax circumstances.

$5.08M

Year 1 Depreciation (Cost Segregation)

$841K

Annual Straight-Line (No Study)

Depreciation flows pro-rata to equity holders, reducing taxable income and enhancing overall net returns — a direct benefit to every LP and GP.

A significant portion of ongoing cash distributions can be offset by depreciation losses, often resulting in minimal current-year tax liability on income received.

Tax efficiency materially boosts effective yield on invested capital — investors keep more of what they earn, a structural advantage over fully taxable alternatives.

A cost segregation study accelerates $4.4M of 5/15-year components into Year 1 at 100% bonus depreciation, generating ~$1.6M in incremental federal tax savings.


What This Means Per $100K Invested

Based on a $6.7M total equity raise, a $100K investment represents a 1.49% ownership stake.

Federal Investors (37% rate) — Illustrative Only, Subject to Passive Activity Rules

Tax benefits are subject to passive activity limitation rules. Passive losses generally offset passive income only and may not be immediately usable against W-2 or active income for all investors. The ability to utilize depreciation deductions depends on each investor's individual tax situation, AGI, real estate professional status, and existing passive income. All investors should consult their tax advisor regarding the applicability of these benefits to their specific circumstances. Depreciation recapture will apply at exit.

Operator Profile

Team & Track Record

Proven Execution Capability

Our team brings 25+ years of combined experience operating, renovating, and stabilizing Class B and Class C workforce housing across Indiana, the Midwest, and New York.

We have successfully executed value-add projects in multiple markets through disciplined operational systems, tight financial oversight, and hands-on leadership. Our approach is operator-led—not outsourced—with teams on the ground and meaningful GP capital invested alongside our LPs.


Demonstrated Results

30%→4%

Vacancy Reduction

Angela Huett, our incoming onsite manager, successfully stabilized The Reserve At Franklin Glenn — a 134-unit Class C workforce property in Indianapolis — reducing vacancy from ~30% to below 4% within 6–8 months through disciplined operations and systematic unit-turn execution.

$2.5M

GP Capital Commitment

$2.5M direct GP capital + $3.0M sponsor-affiliated family capital = $5.5M total sponsor commitment — representing 82% of total equity and ensuring full alignment with LP investors.

  • Extensive contractor & vendor relationships: Pre-negotiated pricing, quality control, and execution timelines
  • Deep Section 8 expertise: Established relationships with Indianapolis Housing Authority for priority placement
  • High-touch operations: Manager, maintenance, and leasing team already identified and committed
  • Hands-on GP involvement: Weekly property visits, monthly financial reviews, direct oversight of all major decisions

Why Applegrass Real Estate

Indy Town Apartments represents a rare combination of strong real estate fundamentals, deep operational mismanagement, and highly accretive assumable debt. The upside is not speculative—it is directly tied to disciplined execution: turning units, enforcing leases, integrating Section 8, and restoring operating efficiency.

Investment Thesis Summary

  • Below-market entry basis with $8M+ embedded value
  • 2.81% assumable debt creating 380 bps of immediate rate arbitrage
  • 115 vacancies = immediate revenue acceleration opportunity
  • Long Section 8 waitlist with low current utilization
  • Proven operator team with demonstrated workforce-housing turnaround experience
  • Conservative underwriting with strong downside protection
  • Multiple exit pathways: refinance, sale, or long-term hold


To proceed: contact Harrison Grass at info@applegrass.co or +1-929-314-0649. A data room is available upon request containing financials, rent roll, PCA, Phase I, and loan documents. Minimum investment: $100,000.


Applegrass Real Estate

Applegrass Real Estate excels in operator-driven turnarounds and cash-flow-focused multifamily investments. We are not financial engineers—we are hands-on operators who create value through systems, accountability, and relentless execution.

Our platform combines:

  • $2.5M of GP capital invested to ensure full alignment with LPs
  • On-the-ground Indianapolis management with a proven workforce-housing stabilization record
  • Hands-on GP oversight including weekly visits and monthly financial reviews
  • Disciplined operational systems focused on leasing, maintenance, and Section 8 integration

With a below-market basis, high-retention voucher demand, and a rare 2.81% debt assumption, we are positioned to deliver resilient cash flow and attractive long-term risk-adjusted returns.

We invite you to partner with us on this exceptional opportunity.

Our Team

Applegrass Real Estate is a vertically integrated multifamily operator focused on value-add acquisitions, disciplined execution, and long-term ownership.

Harrison Grass

Co-Founder, Applegrass Real Estate

  • Co-founded Applegrass Real Estate in 2021, building a 24-property, 105-unit vertically integrated multifamily portfolio in the Hudson Valley, NY from the ground up.
  • Leads all acquisitions, underwriting, financial modeling, and investment strategy across Applegrass — with deep experience in deal structuring, capital markets, and distressed-asset valuation.
  • Spearheaded the Indy Town acquisition — sourcing, underwriting, and closing a $25.8M assumable Freddie Mac loan assumption on a 412-unit portfolio.
  • Financial Economics, Columbia University. Former First Sergeant, Israeli Defense Forces.
  • Investing $2.0M of personal capital in this transaction.

Harrison Grass

harrison@applegrass.co

Cell: 917-605-2259

Nathan Applebaum

Co-Founder, Applegrass Real Estate

  • Co-founded Applegrass Real Estate in 2021, overseeing day-to-day operational execution, renovation management, and portfolio performance across all Applegrass assets.
  • Leads vendor coordination, contractor oversight, leasing execution, rent-roll stabilization, and asset-level reporting across the Hudson Valley and Indianapolis portfolios.
  • Nearly a decade of experience across complex real estate transactions and multifamily operations with a hands-on approach to value creation.
  • Economics and Finance, McGill University. NYC-based operator directly involved in Indiana and Hudson Valley asset management.
  • Investing $500K of personal capital in this transaction.

Nathan Applebaum

nathan@applegrass.co

Cell: 347-635-3576