Red Bank apartments draw buyers

Red Bank apartments draw buyers

March 8th, 2013 by Mike Pare in Business Around the Region

COMING SUNDAY:

Read about Chattanooga's apartment construction boom.

APARTMENT SALES

Among apartment complexes sold over the past six months in just downtown Chattanooga:

• Marion Apartments

• Stewart Apartments

• 604 East Fourth Street Apartments

• Jefferson Apartments

• Wanda Apartments

• 615 Lindsay Street Apartments

• 418 Vine Street Apartments

• 611 Houston Street Apartments

• 528 East Eighth Street Apartments

• 828 Flynn Street Apartments

• 856 McCallie Avenue Apartments

The Chattanooga area's hot apartment market continues to sizzle with Red Bank complexes drawing lots of attention from buyers.

Mountain Brook Apartments on Mountain Creek Road in Red Bank has been sold for nearly $20.7 million, one of the largest transactions in the local market for an apartment complex.

Also, an Australian group has weighed into the area's apartment market in a major way, either buying or planning to purchase 220 units in Red Bank. Falcon Venture Capital has paid $2.7 million for a 100-unit complex and has plans to buy 120 more units for another $4 million, said Chattanooga real estate broker Marcus Lyons.

Mountain Brook Apartments, built in 1986 and with 280 units, was bought by a company associated with Freeman Webb, a Nashville- based business that bills itself as Tennessee's largest owner and manager of apartment properties.

Bill Freeman, co-founder of Freeman Webb, said the company had to move quickly during a foreclosure sale with a tight deadline to acquire the apartments.

"We're excited about this property and we plan on making improvements to it later this year, and that's when we will have a chance to bring our investors into this transaction," Freeman said. "Chattanooga is a tremendous market that we're proud to invest in, and now under Mayor Berke's leadership we think the city has an incredibly bright and promising future."

The Mountain Brook deal is the second apartment purchase in excess of $20 million in the past year in the Chattanooga area. Late last year, an Omaha, Neb.,-based investment group purchased one of Chattanooga's biggest apartment complexes for $25.3 million. Standifer Place Apartment Homes, a 240-unit complex on Jenkins Road, was acquired by a real estate partnership assembled by America First Real Group of Omaha.

Lyons said the Australian company bought Silver Creek Apartments at Dayton Boulevard and Laurel Drive. Plans are to fix up the complex and change its name to The Cove. The other units, also in Red Bank, are under contract, Lyons said.

"The Southeast is on their radar," he said about the Australian group.

The moves come just a few months after about a dozen downtown Chattanooga apartment buildings changed hands.

Lyons said the Red Bank area is becoming attractive in part because of its proximity to downtown's North Shore.

"The North Shore is moving that way" toward Red Bank, Lyons said.

David Wilson, primary analyst for the Birmingham-based real estate services firm Rock Apartment Advisors, said the Chattanooga market has been "one of the more healthy" in the Southeast.

Overall, Wilson said there is a lot of activity with respect to the buying and selling of existing apartment properties.

"There are a lot of buyers in the market," he said.

Wilson said financing is attractive with historically low interest rates, and the apartment market has benefited from the growth in rents.

"Buyers are coming back," he said. "All the factors which influence price have gotten better essentially."

Lyons said the new owner of Silver Creek plans to plow about $800,000 into the site to refurbish the apartments with updated cabinets, countertops and floors as well as do exterior work.

He said investors in apartment properties are high on the Chattanooga area because the market isn't over built. Lyons, whose Lyons Group company specializes in the apartments segment, said buyers can get a better price per foot buying rather than building.