By Dees Stribling, Contributing Editor
Louisville, Ky.—Continental Realty Advisors (CRA), a Denver-based fund investor in multifamily residential properties, has acquired Jamestown at St. Matthews for $25 million. The 355-unit property is in the eastern part of the Louisville metro area, near the intersection of I-64 and I-264.
CRA is planning about $4 million worth of renovations on the property during the next two years, including the demolition of its existing clubhouse. A new clubhouse will take its place, and the company will also fully renovate the apartment units and redo the property’s landscaping.
Louisville is currently a tight apartment market. Marcus & Millichap Real Estate Investment Service predicts that by the end of 2011, the metro area’s apartment vacancy rate will be 4.7 percent. No new developments are slated to come on line during this year even as the market adds a modicum of jobs, thus putting further downward pressure on vacancies and upward pressure on rents.
Jamestown at St. Matthews adds to the CRA’s ongoing investment in the Louisville market. Currently the company’s investment in the area totals roughly $70 million, and the CRA says that it’s looking to add another $100 million or so to its area portfolio.
According to Warren Horvath, director of acquisitions for CRA, institutional investors are still looking for what they always have. “Fundamentally, it’s the same as always, which is a yield that’s commensurate with the risk,” he tells MHN. ” Depending on the investor’s appetite for risk and the focus of a particular fund, that could be from a low of core-plus and core, to a high of value-add and opportunistic. This transaction fits into our CRA-B1 fund, which is predominantly value-add. Also, scale never hurts.”
If the supply-demand dynamics are sound and the trend looks positive, CRA will continue to invest in secondary markets, Horvath adds. “You see a lot of groups going to secondary markets that are ‘chasing yield,’ ” he says. “Our approach is more disciplined, in that we target those secondary markets with sound fundamentals, then focus on uncovering specific opportunities.”