LYNCHBURG, VA - Four Mile Capital, a privately-held real estate investment firm based in Louisville, CO, has acquired the 156-unit Old Mill Townhomes in Lynchburg, VA in an off-market transaction. Old Mill, built in 1975 and sitting on 15.4 acres, consists of one-, two-, three-, and four-bedroom townhome units and has a competitive amenity package, including a pool and fitness center. Greenbrier Management, based in Newport News, VA, has been awarded the management contract.
The transaction closed July 1, 2019, for a price of $10,750,000, or $68,910 per unit and $75 per square foot. As part of their acquisition, new ownership assumed a 55% LTV Fannie Mae fixed-rate amortizing mortgage at 5.05% and placed a $2M supplemental loan on the property, fixed at 5.08%. FMC plans to update the pool area and leasing office, as well as invest in energy efficient and water saving measures in the units, but the physical asset has very little deferred maintenance, with roofs less than 10 years old and mechanicals and unit interiors updated in the past 8 years.
Fresh off a 234-unit Roanoke acquisition in January 2019, FMC now owns about 700 units in the state of Virginia and is looking to add even more. “Lynchburg is an excellent example of an under-the-radar market that gets us excited, and we're thrilled for the chance to reinvest in this community. It’s one of the most stable and diverse economies in the state, with positive job and population growth, limited apartment supply and low market vacancy, and anchored by a growing university,” said Eric Mallon, one of FMC’s principals. “We also love the affordability metrics in city like Lynchburg, where we can provide quality housing for our tenants at reasonable rents, but still generate attractive yield for our investors.” Liberty University is located about 4.5 miles from Old Mill and has roughly 15,800 on-campus students; including online degree programs, total enrollment is over 100,000 students, resulting in a $1B annual economic impact to the city of Lynchburg.
FMC will implement more sophisticated and thoughtful management, utilizing their institutional-quality asset management platform to control operational expenses and make strategic decisions for the asset. “Buying a stabilized property with limited deferred maintenance, low-leverage amortizing debt, and at a basis well below replacement cost allows for a fairly straightforward business plan while still achieving above-market risk-adjusted returns,” said Andrew Jumbeck, VP of Acquisitions for Four Mile.
Four Mile Capital continues to pursue additional value-add investment opportunities throughout the U.S, with a specific focus on Colorado, Virginia, the Carolinas, Iowa, and Wisconsin. They employ an opportunistic strategy in acquiring off-market properties that fall below the radar of its institutional peers, targeting investments with a total capitalization between $10MM and $100MM, and between $4MM and $35MM of equity.