Monroe / Sterling Heights 252 Portfolio
Sale Price: Subject to Market
Property Type: Apartments
Unit Count: 252 Units
Average Unit SF: 570 SF
NAI Wisinski Great Lakes is pleased to present a 252 unit portfolio comprised of two ranch style apartment communities situated in Southeast Michigan. The assets are institutionally owned and managed. Each asset is performing well, yet offers rental upside through strategic enhancements.
The properties are located in two separate and very distinct suburban submarkets of the Detroit metropolitan area. The 150-unit Olivewood Apartments was constructed in 1985 and is located in Sterling Heights, the fourth largest city in Michigan. The 102-unit Garden Court Apartments was constructed in 1988 and is located in Monroe, a deepwater port city along Lake Erie, just 15 miles north of Toledo, Ohio and 25 miles south of Detroit. The assets are close enough together, 60 miles apart, to be non-competitive with each other, while still allowing for economies of scale for both management and staffing.
Over the past three years, the owners focused on making capital improvements to both properties. New roofs were installed at each asset at a cost of $210,000 at Olivewood $116,213 at Garden Court. Olivewood spent $56,000 on HVAC replacement, and Garden Court spent $18,670 on the same. The properties were reappointed with new carpet and vinyl at a cost of $68,000 at Olivewood and $20,250 at Garden Court. In addition, Garden Court invested $17,500 on new appliances.
The apartments at Olivewood and Garden Court are structurally identical. The building similarities should allow for maintenance efficiencies, as parts and materials required for replacement and repair will be virtually identical.
The properties each benefit from nearly 100% physical occupancy. 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 property’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 properties offer a compelling opportunity for new entrants to the Michigan marketplace. An investor can obtain a sizeable unit count with two properties in close proximity to each other. Likewise, existing operators can make a significant addition to an existing Michigan portfolio.