Dusten (lead developer) has been successfully operating in the local market for over a decade and has deep business, family and community ties in Sioux Falls.

Caleb (head of construction) is similar, operating a multi-generation family business.

We have two premium developments in Sioux Falls (Blu on Lorraine and The Velthuis) that have an amenity-rich design. Blu opened at the end of August 2023, and Velthuis is progressing on schedule — despite building during Covid, international supply chain breakdowns, and the fastest rising interest rate environment in US history.

In terms of the No Frills format, the team has successfully executed this strategy on three other South Dakota developments: the Reserve Flats in Brookings, Washington Crossing in Sioux Falls, and Briarwood Reserve in Sioux Falls. We also just recently closed our Jefferson Reserve deal that follows the same model.

This approach builds faster, gets rents faster, and feeds the starving local demand for quality-yet-No-Frills Class A shelter.

Rising rates have made it harder to qualify for a home loan. This comes on top of the existing housing shortage in the local market. Further, the higher interest rates have forced less qualified developers out of the market.

Our (successful) policy is to develop if inventory is needed, regardless of the rising or falling of interest rates. When the rates drop back down we refinance, because the price to construction is always cheaper today than tomorrow (with few exceptions).

We have 2 distinct advantages:

1. Ability to secure debt at below-market terms due to our deep relationships with local banks.

2. In-house development and construction team that helps us drive efficiencies throughout the development process.

This helps us to cater to the ravenous demand while being financially prudent. The lack of competing products provides additional leverage post-construction as we will be able to move rents and push occupancy quicker than underwritten.

Aspen Ridge Reserve will be a series of 12 and 14-plex buildings for a total of 228 units across all phases. This quality but no-frills wellness design reduces construction costs and allows significant operating efficiencies pre- and post-construction.

Each building will be built one after the other, with a minimum of 5 buildings completed in Phase 1. This will allow us to lease units and have the property cash flowing during construction. The taxes and interest are typically paid from this additional income, which leaves more in the reserve account and further reduces risk.

Upon the completion of each building, the cash flow stream will be seasoned earlier versus the typical development where the entire development has to be constructed before cash flow begins. The earlier seasoning of cash flow allows for a potential earlier refinance (not included in the underwriting for conservatism). This would let us return funds back to investors at a quicker pace especially as the market expects rates to be lower heading into the latter half of 2024 / early 2025. To reiterate, a refinance is not modeled into our underwriting to maintain conservatism.

There is only one exit strategy in any real estate investment — sale.

The unique, no-frills approach can allow for a quicker refinance due to income seasoning earlier, but we are not hinging on it.

We will position the asset for an eventual sale in 4-5 years.

Favorable population growth and job growth along with supply-demand imbalances and an “under the syndication radar” baseline make the Sioux Falls metro an obvious target for the savvy real estate investor.

Beyond that, our developments here keep working, coming in ahead of schedule, and we have tons of penetration and experience in this market — all “unfair” advantages that investors need to lean on.

Located in the north-east, Brandon is an affluent suburb of Sioux Falls, where NIMBYism has been the central theme, leading to a scarcity of multifamily product.

This is the top school district in the state, with a ~32% higher median household income than the national average. The community typically balks at multifamily development, but the city leadership understands it will be necessary to keep pace with Brandon’s growth.

We had originally coveted — and then lost — this land during spring 2023 bidding. Once the original deal fell through, due to our local reputation we were the first to receive a call from the broker, and we jumped on it.

This positons us for a unique opportunity in a submarket that otherwise greatly suppresses multifamily competition.