Galil Capital has etablished various private investment partnerships in the USA with the goal of taking advantage of recent distressed prices of residential real estate properties in Florida:
GC Residential Properties (“GC1”) was founded in September 2009. GC1 purchased 72 condo units in selected communities in South and Central Florida. The aggregate sale price of these 72 condo units in 2005-2007 was over $15 million.
GC Florida II (“GC2”) was founded in October 2010. GC2 purchased 93 condo units in selected communities in South and Central Florida. The aggregate sale price of these 93 condo units in 2005-2007 was over $20 million.
GC Florida III (“GC3”) was founded in January 2012. GC3 purchased 283 residential units in 7 multi-family properties (231 units) and 52 individual units in selected communities in South and Central Florida. The aggregate sale price of these properties in 2005-2007 was over $16 million.
GC Florida IV (“GC4”) was founded in February 2014. GC4 purchased 1 commercial center (45,000 sf) in Orlando MSA and 68 residential units in 1 multi-family property (30 units) and 38 individual units in selected communities in Central Florida.
GC5 Florida Storage (“GC5”) was founded in November 2013 and purchased a mini-self storage facility in Cocoa, FL (510 storage units, 53,000 sf)
GC1 , GC2 and GC3 were established to take advantage of the crisis in the real estate market in Florida, USA. With prices of condos down about 75% from their pick in 2005-2007, we believe that apartments in selected well established cities in Florida offer in 2010-2012 a unique opportunity for conservative investors to buy cheap properties, and make significant capital gains in a few years time.
The current economic crisis in the USA real estate industry, resulting from, among other things, the USA economic slowdown, the lack of liquidity in the banking system that created significant difficulties for buyers/ investors trying to obtain loans and mortgages, and the lack of liquidity and over leverage among most traditional real estate investors have created one of the worst ever market conditions in the real estate industry in Florida. Furthermore, a growing number of home owners that purchased their homes in 2005-2007, are facing difficulties in meeting their mortgage payment obligations and are subject to foreclosures, resulting in the lending banks becoming the owner of such properties.
We believe that residential real estate in Florida in 2010, represents a unique opportunity for conservative investors to purchase residential apartments at prices 70%- 75% less than the prices paid for these apartments 3-4 years ago, and even lower than its replacement cost (the cost to build the same apartments today). These residential apartments can be leased to generate on-going cash returns (expected NOI of 5%-10% per annum on each unit), and when these apartments are sold in the future when the market conditions improve, to generate significant capital gains.
GC shall invest in residential properties (garden style and high rise) for the middle-upper class (class B) in Florida, USA, with the goal of generating 5%-10% annual cash return on the investment and will strive to generate significant capital gains when the apartments are sold in 4-5 years. GC shall purchase single or bulk residential units, primarily from foreclosures or short sales, focusing on certain well established residential neighborhoods. Real estate owned by banks (class B garden style condos) are sold today at prices of $55-$70 per square feet (SF) when the replacement cost (the cost to build similar apartments) is approx. $120/SF. Same units were sold 3-4 years ago at higher prices of $200-250 per SF. Historic prices of real estate transactions in the US are published in official web sites and are accurate and publicly available.
GC expects that the prices of residential units in Florida, shall eventually come back to at least its replacement cost, and expects that within 4-5 years, GC would be able to sell the apartments at price levels of $110-$120 per SF. In addition, GC expects that within 2-3 years, at the moment that US banks shall start providing mortgages to home buyers (there is no doubt that this will eventually happen), apartment price levels shall go up to at least $90 per square feet, representing an increase of approx. 50% from today???s purchase prices (even today, home owners are willing to pay 25%-35% more than investors when the bid for the same unit). If funding will be available, GC shall consider borrowing against its portfolio and use the proceeds to return to its investors the majority of their investments.
GC has established a strong team of local experienced professionals (realtors, inspection companies, lawyer, property managers) that assist GC in executing its business plan.