NAI Wisinski Great Lakes (member NAI Global) is pleased to exclusively present the Boerema and Englewood Apartments, a 62-unit apartment community located in Grand Rapids, Michigan. The asset is composed of two different properties located across the street from each other. Englewood is a garden style community consisting of 32 two bedroom one bath apartments with 28 carports and 27 surface parking spaces. Boerema Apartments has 29 one bedroom one bath and 1 two bedroom two bath ranch style apartments with unfinished basements and 57 surface spaces. All units included washer/dryer connections.
The two apartment communities have been operated as a housing resource for those attending the Calvin Theological Seminary. The Seminary owns and operates all 62 units and offers a gross lease to its students, including all utilities, cable television and internet. As a matter of providing affordable housing to its students, the Seminary has not sought to attain market rate rents, such as those being charged by other apartment communities in the area.
The property currently derives no additional income from ancillary fees and services. The assumptions used in this model do not include any additional revenue for items such as application fees, retained deposits, late fees, pet fees, early termination fees, carport rent or the like. The current management has ignored the strong upturn in market rents, so increases in rent should be easily obtained on the 30 apartments not included in the proposed temporary Master Lease.
Calvin Theological Seminary is looking to retain up to 32 of the 62 apartments for a period of up to two years under a master lease of those units. The Seminary boasts very good credit and presents as a quality, bankable tenant. The rents paid under the proposed master lease would be at market rate, as outlined in the unit mix contained herein, plus an escalation provision at the end of year one. All utility costs for those units would be borne by the Seminary. As sub-landlord, it would also be responsible for tenant communication, unit turnover and interior maintenance and upkeep of the subject units. At the end of the master lease, all units would be turned over in “rent ready” condition to the purchaser.
The asset offers the opportunity to immediately enhance value through charging ancillary income and implementing unit updates to generate rent premiums on the 30 units not subject to a master lease. The 32 units subject to the master lease provide the benefit of certainty of income and reduced management burden for the duration of the lease period. Upon expiration of the master lease, these units will then be unencumbered and available for future revenue growth.