MZ Capital Acquires TN Luxury Asset

The Northbrook, Ill.-based firm will upgrade and reposition the 130-unit apartment and townhome community in suburban Knoxville to meet the growing demand for luxury rentals.
British Woods

MZ Capital Partners has completed the acquisition of British Woods—an upscale apartment community in the Oak Ridge suburb of Knoxville, Tenn.—through a newly formed entity, MZ Capital Knoxville LLC. According to Yardi matrix data, the firm paid $7.8 million for the 10-acre property, which comprises 17 two-story garden-style and townhome buildings totaling luxury 130 units. A three-year, $5.3 million loan originated by Wintrust Bank was used to finance the acquisition, Yardi Matrix reported. The seller was HM Management, Nashville-based private ownership group.

The new owner plans to fully renovate and reposition British Woods over the next two years to take advantage of Knoxville’s growing multifamily market and demand for luxury rentals.

“Over the past few years, we have been looking to further build out our real estate portfolio and feel the Knoxville market is among the most vibrant multifamily real estate markets in the country,” Michael Zaransky, MZ Capital Partners managing principal, said in a prepared statement.

“A growing population and job growth in the Knoxville submarket continues to create high demand for amenity-rich multifamily product in the area,” added Brad Zaransky, a principal at Northbrook, Ill.-based MZ Capital Partners. “We are extremely excited with this opportunity to expand our business in a market like Knoxville.”

Located at 301 Briarcliff Ave., British Woods is about 20 miles from Knoxville. The property is within close proximity of the Oak Ridge National Lab, the largest employer in the region.

The Knoxville MSA maintains the lowest apartment vacancy rate of the Tennessee metros and achieved rent growth of 6.4 percent in the last 12 months.  The greater Knoxville area has consistently been recognized as a leading city in the United States including placing fifth in a Forbes magazine listing of the Best Places for Business and Careers and second in Livability magazine’s Best Places to Retire list. The Oak Ridge public school system was rated the top school district in the state of Tennessee for 2018-1019.

Property Details

Built in 1987, British Woods and Townhomes consists of 32 one-bedroom apartments, 40 two-bedroom apartments, 36 two-bedroom townhomes and 22 three-bedroom townhomes. All the units have private balconies or patios, in-unit washers and dryers and large floor plans average that more than 1,000 square feet. Community amenities include ample outdoor spaces, a clubhouse and swimming pool.

MZ plans to upgrade the clubhouse and pool areas and add a state-of-the-art fitness center, outdoor recreational space and dog park.

“Unit renovations will be done in phases as leases come up for renewal,” Michael Zaranksy said, noting the firm plans to execute a value-add strategy to enhance the property to meet the increasing need in the market for upgraded, luxury apartments.

The property was 98 percent leased at the time of acquisition. Rents in 2018 ranged from $699 to $924 a month with an average of $787, according to Yardi Matrix data.

Image courtesy of MZ Capital Partners