We are exceptionally pleased to have consummated this acquisition. The community of one and two bedroom apartments is located in what is referred to as the “healthcare corridor,” and is directly across the street from the University of Mississippi Medical Center. It is also within walking distance of St. Domnic’s Hospital, as well as the GV Montgomery VA Medical Center. In total, it is estimated that Fondren Hill is within walking distance of 15,000 jobs.
However, that is not all that the community has to offer. It is also within walking distance of an area known for its nightlife, with many bars, eateries and craft beer establishments. Indeed, Fondren Hill is in one of the best locations that Chasseur Realty Investors acquisitions team has ever seen.
The strategy at Fondren Hill is simply to increase rents to the level which they should be in the market. Immediately next door to the community is located The Meridian, which has rents $500 per month higher than our community. Chasseur therefore will initiate a $419K capital improvement program directed mostly at interior renovations, and intended to close a portion of that $500 gap.
We feel that the purchase of Fondren is an integral part of our Mid-South investment strategy. Chasseur’s accounting offices were moved to Memphis in 2018, and the city is considered the hub of future acquisitions activity.
Mr. Dominy previously directed asset management for the investment company which created Impetus. While directing asset management, a number of successful transactions were consummated, notably the disposition of a 2,013 portfolio in Mobile for $134.5M which had been purchased for $98M. In recent days he has designed the acquisition strategy for Impetus. The company will begin seeking investments in the Midwest immediately.
While advising Impetus, Mr. Dominy will continue to direct acquisitions as well as operations for Chasseur in our two target corridors, Memphis to Little Rock and Tallahassee to Mobile. Chasseur’s same store NOI rose by 18.7% in 2017, and has risen by 14.7% in 2018. Chasseur also recently closed two new acquisitions in Memphis.
The Grove at Hedgemoor is a 64 unit community which is situated in the affluent suburb of East Memphis, and was purchased at a cost of $71,000 per unit. It is just minutes from the University of Memphis, and is surrounded by a housing development with homes which range in price from $650,000 to $1,200,000. The one mile radius boasts an average annual income of $96,000 annually.
It’s sister property The Grove at Clubview, consists of 32 units, which are all very large two bedroom, two bath apartments. The Grove is immediately adjacent to The Chickasaw Country Club, and all apartments boast spectacular views.
These two communities are just the beginning of Chasseur’s Memphis to Little Rock investment strategy. The company intends to invest in this geographic region because it offers a diversified economy which is not too hot, and not too cool, therefore making it a region where investments can still be made on a sensible basis, and still offer reasonable prospects for success.
Villas sur la Riviere in Gulfport had the greatest increase at 220%. The Bandywood Apartments in Pascagoula had the second highest increase, which was 83.2%. Next was Courtyards on Park in Valdosta, which was 58.3%. Heron Lakes in Mobile also enjoyed a 13.0% increase. Ashley Woods in Macon, Georgia saw it’s NOI increase by 12.6%. And Azalea Park in Pascagoula had a 9.4% rise in NOI.
The rise in NOI certainly goes well beyond the favorable U.S. economy, and reflects Chasseur’s determination to invest in turnaround assets and cause them to perform far in excess of the manner that they had at the time of acquisition.
The two communities are The Grove at Hedgemoor, and The Grove at Clubview. Both communities are located in the affluent East Memphis market, and are owned by the same seller. The properties are immediately adjacent to a housing community which boasts homes which range in price from $650K to over $1M. The Grove at Clubview overlooks the prestigious Chickasaw Country Club.
Chasseur’s plan is to make modest physical improvements to the properties themselves, since they are presently in good condition. However, it is felt that by installing the high quality property management of Chasseur, the communities can be made to operate at a substantially higher level.
It also increases the total number of properties closed upon in 2015 up to six. We closed on Ashley Woods in Macon, Georgia on April 8th. We closed on Whispering Woods, also in Macon Georgia, on June 9th. And we closed on the Villas sur la Riviere in Gulfport, MS on June 26th.
Our targets assets range from 75 to 200 units, C assets in B neighborhoods and B assets in A neighborhoods, and must have a value add component. We seek communities with a vintage of 1970 to 1995, and in a price range of $3M to $10M.
As a boutique investment, we seek to grow slowly and carefully, and intend to acquire one property per quarter.
The remaining property is situated on the South side of Atlanta. Chasseur has managed communities in this metropolitan area dating back to 1996.
We are excited to have the opportunity to asset manage communities for this privately held investment company. We are confident that Chasseur involvement will lead to greater NOI increases, as we have demonstrated in the past and as is documented on the back page of each issue of “Courageous.”