Horseshoe Lodges, Midland, TX
89-unit RV & Cabin Campground at a 19.4% cap rate!
(Please note that this investment is using a Reg D 506(C) exemption.)
Highlights
- 89-unit Worker Campground in Midland, TX with a unique mix of cabins and RV pads.
- Strong historical returns during the last 5+ years.
- Negotiated sales price and very favorable loan terms account for current (Apr 2020) market uncertainties.
- The $3,400,000 sales price represents a 19.4% cap rate using current (March 2020) actuals.
Legion Investing LLC is excited to announce to our investors the following opportunity in Midland, TX. Horseshoe Lodges is an 89-unit property that has been generating consistently strong returns for the past five years during a variety of market conditions. The property serves as workforce housing for the oil and gas fields in the area. Horseshoe has a unique mix of 46 RV pads, 42 studio-style private cabins and one 1,300 square foot house. The laborers working in this area need shorter term housing than offered by apartments, something Horseshoe has provided since it was built in 2013. Our very conservative underwriting indicates this property is positioned to exceed the 9% preferred returns we plan for our investors using March 2020 income and expenses. A full description of this investment can be found in our Horseshoe Lodges Business Plan which you can obtain using the information request form below.
A word about current market conditions: we have negotiated a price and seller financing with favorable terms to help protect against a long-term collapse in the global energy markets. This allows us to help protect our investment during downturns in the market while still allowing for substantial upside potential during more stable markets. We remain confident that our country and energy producers will persevere and emerge stronger for this experience. Until the full recovery occurs, we believe oil will still be coming out of the ground and Horseshoe will still be there providing housing for the workers and in turn generating cash flow for our investors.
Property Performance
The geological formation known as the Permian Basin sits in west Texas and southeast New Mexico. A USGS survey released in November 2018 estimates that the Permian contains 46.3 billion barrels of crude oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids. The development of this formation has helped bring the US from being heavily dependent on imported oil to becoming a net exporter. The global demand for energy is steadily increasing and the use of oil and gas will most likely continue for many years to come. The future ability of this property to generate steady income is directly tied to the energy resources located in the region. The question is, simply put, do we need the 46 billion barrels out of the ground? If yes, then the workers will need a place to stay, one that is set up to accommodate their specific needs for short- and medium-term housing.
We have examined Horseshoe’s financials dating back to 2015. During this time, the property has shown a remarkable ability to generate cash flow even during energy market tightening. The best example of this was during the oil price contraction seen in 2015 when West Texas Intermediate (WTI) crude was trading at $30/barrel. Horseshoe’s NOI during this time remained steady, as can be seen in Figure 1. Note that the price of oil dropped 50% from mid-2015 to early 2016, yet Horseshoe’s NOI remained relatively steady. (The sharp rise around June 2019 was due to an expansion in the number of RV spaces and cabins.)
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(Please note that this investment is using a Reg D 506(C) exemption.)
Highlights
- 89-unit Worker Campground in Midland, TX with a unique mix of cabins and RV pads.
- Strong historical returns during the last 5+ years.
- Negotiated sales price and very favorable loan terms account for current (Apr 2020) market uncertainties.
- The $3,400,000 sales price represents a 19.4% cap rate using current (March 2020) actuals.
