An Ignoble Experiment: The Case for Case Studies

Dear Investor,

Is there a benefit to sponsors sharing case studies? Case studies usually provide a deep(er) dive into a particular fund or investment. Viewing these details can be a good tool to help evaluate sponsors. From time to time sponsors will issue case studies of various completed projects that demonstrate the type of work they do, and how they approach investments.

By way of disclosure, we have an advertising relationship with Mortar Group, meaning we get paid for making this introduction and sharing this content. As always with these types of deals, consider this an introduction and not a recommendation. Every deal is unique and the responsibility to vet any and every deal you invest in still lies with you. This opportunity is available to accredited investors only.

One important note, case studies should not be just cherry-picked projects that knock it out of the park - but also deals that underperformed – and they should be recent and relevant to the type of investments being offered. It is as important to know how ands why one project had solid returns versus similar projects that didn't meet projections. Understanding those factors can help you get behind the steering wheel of a sponsor's evaluation of a project and how they executed their exit strategy.

So, what exactly is in a case study?

Description of the Project

This usually covers the project in scope, whether it be multifamily rental, condos, value-add, ground-up, commercial, etc. It will also cover the attraction of a specific project from an investment perspective. It will go over the geographical location and any unique qualities that are helpful from an investor's point of view. It includes the details of the investment including purchase price, equity investment, costs, term, etc.This gives a good background to the project prior to dissecting the numbers.

Overview / Work Involved

Each case study usually includes the work involved, projected increase in square footage, rent, condo pricing, etc. It goes into any specifics about any hiccups along the way, permitting issues, work completed, budget etc.This also includes any pictures of the project prior to commencement of work and the finished product. It can also detail the period of work and any specific issues that may have come up from an execution perspective.

Projections vs Reality

A good study will show how the sponsor initially estimated the cost of work, or the valuations of a completed asset. These metrics can be cross–checked with how the investment ended – and you can see how accurate, or how off, the original estimates were.

Return Metrics

This is the part most prospective investors care about, or what they fast forward to. How did the sponsor do? What type of returns were achieved and what was the final valuation of the project. This gives the summary without knowing what was involved in the project.

Mortar Example – 203 Richardson

In the following link, you'll be able to access a recent case study on one of Mortar's projects – 203 Richardson. Some key points of this case study are as follows:

Type of Investment – Williamsburg, Brooklyn Value Add Multifamily - acquired in 2021

Overview/Work Involved – This was initially a 2-family home converted into a 7-unit multifamily building with a mix of 1, 2, and 3 bedroom apartments. This was completed with the addition of two more floors and a rear expansion

Return Metrics – By converting this into a 7-family building, they were able to achieve a net ROI of 136% and Equity Multiple of 2.50x in about 24 months.

Behind the Scenes Stories –

One other important note is that in chats with sponsors the case study can act as a springboard into deeper conversations to help understand the investment philosophy. A sponsor should be able to answer detailed questions about the case study project and be clear and transparent about what went well in the deal, and what went wrong – or what could have been better (almost every deal has a low or difficult phase before a successful exit). They can also share how the offering is doing today – or some interesting challenges they faced!

For example – in Mortar's listed case study at 203 Richardson, this deal's closing was delayed as a result of Covid, and while it took longer to close on acquisition, it allowed Mortar to build during a rough time in the local NY market. Both they – as the sponsor, and their lender were worried about the local market declines and inflation raising construction prices by double digits. However, once they finished the project and got to market, the delay ended up helping them – as rental numbers were up substantially, and the exit numbers exceeded Mortar's projections.

This content has been shared by Mortar Group. If you're interested in discussing this topic more, or you are interested learning more about Mortar Group, you can schedule a call here: Schedule a Call

Also feel free to view other recent resources from Mortar Group.

Mortar believes in experience and smarter real estate investing. Their fully integrated in-house design, development, and asset management expertise has resulted in dozens of successful privately syndicated deals. This, combined with skin-in-the-game co-investments and in-depth local neighborhood knowledge, helps Mortar mitigate risk and maximize investor returns. Focused opportunities combined with an intimate knowledge of New York's prime niche neighborhoods allows investors to diversify and deploy capital conservatively in projects and divest risk throughout the real estate lifecycle.

Mortar Group extends white coat investors access to exclusive opportunities on new offerings. If you would like to know more, please visit their website, or reach out to their Investment Relations Manager – Francesca Gaccione at 646-559-9471, or gaccione@mortargroup.com.