NAI Wisinski Great Lakes is pleased to present a portfolio of five apartment communities in Kalamazoo, Michigan known as Bronco Apartments and a portfolio of four apartment communities located in Battle Creek, Michigan known as River Apartments, River Oaks Apartments, Redner Apartments and Roe Apartments. The portfolio consists of a total of 507 units of diversified housing stock built between 1969 and 1989. The variety of asset sizes and locations of the properties provide a wide range of diversification. The two groups of properties are located in two separate markets, yet are close enough together, at only 25 miles apart, to be non-competitive with each other, while still allowing for efficient management oversight and staffing.
Existing management has focused on making major capital improvements, including four new roofs at University Village in Kalamazoo costing $260,000 and new metal roofs at the Whitegate Apartments in Oshtemo at a cost of $65,000. River and River Oaks Apartments each underwent major renovation programs between 2008 - 2009. The properties were reappointed with new roofs, new siding, exterior doors, decks and concrete stoops.
The apartments at University Village and California West, although walking distance from campus, are not being targeted specifically to student tenants. As a result, the leasing activity and turnover are not synchronized with the university’s semester calendar, making it easier to manage turnovers and requiring less managerial staff and payroll expense. There is also a wider diversity of residents, rather than solely relying on the student demographic.
The properties have all benefited from historically strong physical occupancies. A substantial number of rents are below market rate, although an assortment of leases and unit types are achieving rent at market. This supports the ability to raise rents across the board with relatively little effort or expense. Additional rent can be obtained by upgrading units, as has been demonstrated by peer assets in each portfolio’s submarket. Demographics support the ability to improve the properties to a higher level of finish, and subsequently the ability to obtain higher rent through unit finish premiums.
The Kalamazoo & Battle Creek 507 Portfolio offers a compelling opportunity for new entrants to the Michigan marketplace, allowing an investor to obtain a sizeable unit count that ensures operational efficiencies. Likewise, existing operators can make a significant addition to an existing portfolio by acquiring nine high occupancy investment assets.