Franklin Square Apartments

Franklin Square Apartments is 76 apartment homes, located 25 miles north of Memphis in Munford, TN, of Tipton County.

Property Overview

Franklin Square Apartments is 76 apartment homes, located 25 miles north of Memphis in Munford, TN, of Tipton County, the second fastest growing county in West Tennessee. Munford boasts a high median household income, home values, and is known for its low crime index and excellent school district.

Franklin Square consists of: 1 swimming pool; 1 clubhouse with party room. Unit features include: open kitchen with bar; appliance package with microwave; tile in kitchen and baths; full size bathtubs; electric hot water heaters; separate central air systems; walk-in closets; washer & dryer connections; patio or balcony.

Premise

The core-plus opportunity existed in refreshing unit interiors, improving curb appeal and landscaping, and updating amenities including the clubhouse – while pushing rents to market and eventually setting new market rents for the surrounding properties. Lexerd acquired Franklin Square Apartments in December 2012 by negotiating an acquisition price of $4,600,000 from the listing price of $5,275,000 – a discount of 12.8%. The property appraised to a value of $4,800,000, or a 6.4% CAP rate.

For exterior capital improvements, the parking lot was striped and sealed, landscaping was touched up including a major drainage project and a successful preventative maintenance program was implemented. By October 2018, the annual net-operating-income (NOI) increased from $309,133 at acquisition to $414,978 – a 34.2% growth. Over the course of the ownership period, there was $578,963 returned in cash via owner distributions.

On October 11, 2018, the property sold for $6,200,000, a 6.7% CAP rate and an increase in value of 34.8% since acquiring the property in 2012.

Investment Summary

City State Munford, TN
Asset Type Multifamily
Months Held 70 Months
No. of Units/SF 76 units / 86,520 sq ft
IRR 21.8%
Equity Multiple 2.64x
Avg Annualized Yield 9.2%
Acquisition LTC 80.0%
Total Rehab Budget $184,574*
Total Investment Basis $1,076,437

 

  At Aquisition At Sale % Increase
NOI $309,133 $414,978 34.2%
Annual Rent $596,359 $713,179 19.6%
Price $4,600,000 $6,200,000 34.8%
Occupancy 84% 92% 8%
Price per Unit $60,526.32 $81,578.95 34.8%

*2015-2018 actual capital improvement expense

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