Time Equities sells ground-up multifamily risk to TIC investors at 5.75%

Time Equities has launched a $95.3 million tenant-in-common offering for OCTAVIA, an eight-story, 465-unit Class A apartment community under construction in downtown Boynton Beach, Florida, which broke ground in September. With no units delivered, the property earns no rent, so the projected 5.75% annual current return, distributed quarterly, has to be funded from something other than operations until the building leases—most likely from offering proceeds or sponsor capital.

The TIC interest sits senior to roughly $34 million of sponsor equity, which puts the $95.3 million of investor money, close to 2.8 times the sponsor's check, ahead of Time Equities' own capital in the stack at about $205,000 per apartment. The offering also carries an executed tax increment financing agreement that the developer expects will significantly lower real estate taxes for roughly ten years after completion, and it projects a planned refinancing to return a portion of invested capital on a tax-deferred basis. The project comprises 465 apartments above 6,500 square feet of retail, a 1,005-space parking garage and approximately 50,000 square feet of private amenities, with MSA Architects, ID & Design International, KAST Construction and Kimley-Horn on the project team.

Boynton Beach is part of a South Florida pipeline that has kept moving into the fall. FRP and Woodfield broke ground in August on an $81.5 million first phase in Estero that delivers 296 apartments and 30,000 square feet of retail, and Related Group began converting Boca Raton's former Office Depot campus into 494 homes the same month. What separates OCTAVIA is who is being asked to write the equity check.

Tenant-in-common paper is the retail end of the development capital stack, and the terms read as the price of persuading smaller investors to underwrite ground-up construction risk. A 5.75% current return is a thin coupon for a building that will not produce rent for a while, and the ten-year abatement plus the tax-deferred capital return are what make the risk payable. Set against this publication's argument that apartment capital is bifurcating while rent growth stalls, the TIC structure suggests institutional buyers are not chasing ground-up South Florida multifamily at these terms; if they were, the equity would more likely be placed whole than subdivided into tenant-in-common interests.

Roughly ten years of lower taxes sit behind that current return, and the projected refinancing is the other return lever in the package. Once the abatement lapses, the outcome rests on the building's economics and the eventual sale price rather than on the coupon—a longer hold than a current-return figure advertises and the piece of construction risk a TIC investor is accepting alongside everything else the offering describes.