I am getting closer to an 8.3 cap (incl pro-rata JV NOI, debt, and subtracting construction at cost). Interesting perspective on Hill Estates renovations; gives hope that this was not a bad deal. I was concerned about the recent vacancy step-up combined with much higher leverage following the Hill Estates deal. Do you have any thoughts about the post-renovation implied cap rate of the Hill Estates deal?
The idea is interesting. But not sure how cheap it is on an implied cap rate? Dream Residential ($DRR.U) was just taken private by Philly based Morgan Companies at a high 6% cap rate. They owned class C/workforce housing type assets that were built on average in the 1980s. DRR had 3,300 apartment units in Dallas, Oklahoma City and Cincy. No comp is perfect but that’s a decent one. Curious if you’re familiar with that one and how $NEN perhaps differs aside from location.
Thanks for reading. Definitely one to look at closer. Is the DRR 6 cap property tax adjusted? It may be slightly lower than a 6 with approx 1/3 of their portfolio in Texas. Either way, a 6% cap for NEN would mean ~90% upside from current price.
It’s hard for me to ignore location superiority and resident stickiness between the two. It’s a heck of a lot easier to build in OK, OH, and TX than it is in MA, but like you said, there are no perfect comps
This is a good reminder that patience can be a strategy, not a constraint. NERA’s story (from Colonial’s collapse to the Browns’ rebuild) shows what real stewardship looks like in an industry addicted to leverage and churn. The 50-year holding periods, high occupancy, and conservative balance sheet speak louder than any headline metric. At any rate, undervalued or not, it’s rare to find a public compay so unapologetically long-term in its DNA.
Excellent deep dive on NEN! The comparison between merchant-owner and investor-owner models really highlights why the Brown family's approach creates durable value. What impressed me most is how they've maintained high-90s occupancy through multiple cycles while keeping leverage conservative (4.2% weighted average interest rate is remarkable in this environment). The replacement cost argument at a >50% discount is compeling, especially given Boston's construction cost inflation and zoning constraints. Do you see the MLP structure as more of a discount driver due to tax complexity, or could it actually be a moat that keeps institutional capital away and the valuation depressed for longer?
It was high 6% almost 7% cap on the reported NOI so not tax adjusted. I’ll look at NEN further. Thanks for the article and the response!
I am getting closer to an 8.3 cap (incl pro-rata JV NOI, debt, and subtracting construction at cost). Interesting perspective on Hill Estates renovations; gives hope that this was not a bad deal. I was concerned about the recent vacancy step-up combined with much higher leverage following the Hill Estates deal. Do you have any thoughts about the post-renovation implied cap rate of the Hill Estates deal?
Thanks - I think nearer term proforma 5-6ish cap, but in 2-3 years it’ll be closer to a 7-8%. I can email you the broker OM if you’d like.
Yes please kindly share. This is one of my larger holdings.
The idea is interesting. But not sure how cheap it is on an implied cap rate? Dream Residential ($DRR.U) was just taken private by Philly based Morgan Companies at a high 6% cap rate. They owned class C/workforce housing type assets that were built on average in the 1980s. DRR had 3,300 apartment units in Dallas, Oklahoma City and Cincy. No comp is perfect but that’s a decent one. Curious if you’re familiar with that one and how $NEN perhaps differs aside from location.
Thanks for reading. Definitely one to look at closer. Is the DRR 6 cap property tax adjusted? It may be slightly lower than a 6 with approx 1/3 of their portfolio in Texas. Either way, a 6% cap for NEN would mean ~90% upside from current price.
It’s hard for me to ignore location superiority and resident stickiness between the two. It’s a heck of a lot easier to build in OK, OH, and TX than it is in MA, but like you said, there are no perfect comps
This is a good reminder that patience can be a strategy, not a constraint. NERA’s story (from Colonial’s collapse to the Browns’ rebuild) shows what real stewardship looks like in an industry addicted to leverage and churn. The 50-year holding periods, high occupancy, and conservative balance sheet speak louder than any headline metric. At any rate, undervalued or not, it’s rare to find a public compay so unapologetically long-term in its DNA.
Excellent deep dive on NEN! The comparison between merchant-owner and investor-owner models really highlights why the Brown family's approach creates durable value. What impressed me most is how they've maintained high-90s occupancy through multiple cycles while keeping leverage conservative (4.2% weighted average interest rate is remarkable in this environment). The replacement cost argument at a >50% discount is compeling, especially given Boston's construction cost inflation and zoning constraints. Do you see the MLP structure as more of a discount driver due to tax complexity, or could it actually be a moat that keeps institutional capital away and the valuation depressed for longer?