A third major apartment complex on Mountain Creek Road has sold this year as Chattanooga's multi-family housing market continues to attract national investment interest.
The Trails of Signal Mountain Apartment at 3535 Mountain Creek Road sold this week for $20 million to a real estate affiliate of Sandstone Apartment Management, formerly Somerset Apartment Management in Charlotte, North Carolina. The purchase price for the 174-unit complex was nearly 67% above the $12 million paid by the former owner, Rait Financial Trust of Philadelphia, to acquire the apartments in 2011.
The former owners renovated the complex of 2-story apartment homes in January 2015. The units sprawled over nearly 20 acres at the foot of Signal Mountain were originally built in 1974 and currently range in rent from about $700 for a studio apartment up to $1,250 a month for a 3-bedroom unit. The complex includes a swimming pool, fitness center and business center.
The new owners paid an average of $114,943 for each of the units at the Trails of Signal Mountain, which was slightly above the per-unit amount paid for two other nearby apartment complexes along Mountain Creek Road that also were built during the 1970s and 1980s.
Last month, the 296-unit Ascent at Signal Mountain, formerly the Radius Apartments, sold to a Nashville firm for $32 million. In January, a Birmingham, Alabama company bought the 280-unit Rise at Signal Mountain apartments in January for $30 million.
Even with the addition of thousands of new multi-family units in Hamilton County over the past five years, existing apartment complexes in Chattanooga have attracted more than $250 million of investments from real estate investors outside of the market in just the past year and a half.
Investors are attracted by Chattanooga's rising rental rates for apartments. A new Zumper study showed the median rental rate for a 2-bedroom apartment nationwide decreased 0.4% over the past year to $1,483 a month.
Although Chattanooga rental rates for 2-bedroom apartments averaged 20.5% less than the U.S. average, rental rates for such apartments jumped by an average 14.6% over the past year. Among the top 100 U.S. cities included in the Zumper rental rate study, Chattanooga had the sixth biggest increase in rental rates for 2-bedroom apartments over the past year.
Trails of Sigal Mountain is the first acquisition by Sandhurst Apartment Management in Chattanooga, although the company operates five other facilities in Tennessee.
Sandhurst Apartment Management owns and manages nearly 11,000 apartments at properties in nine states with collective assets of more than $1 billion.
The apartment complex was built in 1974 and includes a total of 185,132 square feet.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340