ParaWest Group Increased Target IRR For Bay Island Offering

The real estate investment firm ParaWest Group announced that it’s increasing the projected target internal rate of return (IRR) of its Bay Island offering on the RealtyMogul platform to 20.1%. The IRR is the percentage of returns generated to cover the initial investment in a project over a set period of time. An IRR of 20% would generally be considered above average.

The Bay Island project is located in Garland, Texas, a suburb of the Dallas/Fort Worth metroplex. The offering consists of 120 units in 10 buildings built in 1972 that are now 97% occupied. 

It’s a fixed interest rate deal with “personal guaranteed financing that improves the projected IRR ~160bp to the underwritten IRR compared with non-recourse debt and reduces the risk of interest rate increases over the hold period,” according to RealtyMogul.

Managed by ParaWest Group, the estimated hold period is three years with the estimated first distribution set for February 2023. The minimum investment is $35,000. This is the fourth time that RealtyMogul and ParaWest have teamed: “PWG has gone full cycle on its first transaction with RM, having closed in June and generating an investor IRR of 27%, with the second deal currently in escrow and scheduled to close during the third quarter with a projected Investor IRR of 24%” per the offering announcement.”

The lakeside location of the project is a few steps away from Lake Ray Hubbard, a reservoir managed and maintained by Dallas Water Utilities. Bay Island is situated near a billion-dollar mixed development project designed as a waterfront destination. It’s this feature that RealtyMogul mentions as one of the offering’s “value-added” dimensions.

Other “value added” features include plans to upgrade the swimming pool, the office clubhouse and garden areas. The managers expect to introduce interior features as well, such as a high-tech Smart Home package that includes learning thermostats and WiFi door-lock hardware.

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Not investment advice. For educational purposes only.

Photo: Courtesy of RealtyMogul