Underwriting Guidelines

Connell has well-established acquisition guidelines for purchasing Class A multifamily assets in target markets. As a long-term holder of assets, Connell will adhere to its conservative underwriting practices and will avoid chasing yield or assuming unacceptable levels of risk.  Connell intends to underwrite:

• Conservative, realistic rent growth projections.
• Emphasize the downside risk; potential acquisitions must break even under downside stress test.
• Target gross rate of return of 5-6% above the projected compound rate of inflation, over the hold period.

Another cornerstone of Connell’s strategy and risk mitigation is to prudently use leverage and to avoid exposing the properties to undue interest rate exposure or untimely refinance risk. Connell intends to employ modest levels of debt of no more than 60% of the asset’s value (HUD loans excepted).  Connell prefers to use long-term (20 year +) fully amortizing debt for each property acquisition.  Connell intends to underwrite each acquisition to provide adequate cash flow for debt service, cap ex, and distributions throughout hold period.