Pretty excited about this one because I really want to own some property in the hot and growing Tennessee market.
Overall, we’re expecting an 8.2-13.1% return on this equity investment.
We’ve invested roughly $7.2 million to acquire and renovate The Hamilton apartments, a 232-unit apartment community in Hendersonville, Tennessee, a northern suburb of Nashville.
Built-in 1985, the apartment community is in good condition but could be far more competitive with some cosmetic updates. At the time of our acquisition, the property was roughly 92% occupied.
Our partner, American Landmark Apartments, plans to spend $2.3 million on improvements to the community amenities and renovations on all 232 units as they turn over. In-unit renovations are expected to include new floors, paint, lighting, and upgraded kitchens with new appliances. We expect this value-add program to drive an increase in rental income, and consequently, the overall value of the property.
Following the completion of renovations, we plan to hold and manage the property for roughly ten years before seeking opportunities for an exit via sale or refinance. Our goal is to earn consistent income over the duration of the investment, with the potential for long-term upside by selling the property for more than we paid for it.
Why we invested
- Strong relationship with experienced partner: American Landmark Apartments (ALA) owns and operates over 24,000 units with a diverse real estate portfolio valued in excess of $2 billion. Prior to this acquisition, we have invested in a dozen other value-add projects with ALA, including The Enclave at Lake Ellenor in Orlando, which achieved a 39% appreciation in appraised value in just 21 months.
- Income-generating asset: The property was 92% occupied at the time of our investment, generating consistent cash flow through rental income.
- Healthy local economy: Nashville has experienced tremendous growth in recent years. Over the last five years, Nashville’s labor force grew by roughly 13%, while employment growth more than doubled the national average at 17%. As the area continues to grow, affordability is becoming a top concern, making neighboring areas like Hendersonville attractive to renters and homebuyers.