MANHATTAN, KS – Four Mile Capital, a privately-held real estate investment firm based in Louisville, CO, has acquired the Scenic Woods Apartments, a 144-unit multifamily community in Manhattan, KS. Scenic Woods, completed in 2012 and sitting on 11 acres, consists of 66 one-bedroom units, 60 two-bedroom units, and 18 three-bedroom units, each unit having its own private balcony or porch. Averaging over 950sf, Scenic Woods boasts some of the largest floorplans in the market. The Prime Company, has been awarded the property management contract.
The transaction closed on July 16, 2021, for $14,750,000, which equates to $102,000 per unit or $107 per square foot. As part of their acquisition, FMC raised over $5.8M in equity from their network of high-net worth investors and assumed the seller’s $9.7M Fannie Mae loan with 4 years remaining on the term.
“Though Scenic Woods was being offered on a ‘free and clear’ basis, we looked at the transaction through a different lens in this competitive landscape. Even though the interest rate on the Seller’s loan was bit high at 4.81%, there are only four years remaining on the term before we can refinance, and with us assuming the loan, the Seller could avoid paying a $1.6M prepayment penalty. This savings realized by the Seller directly translated to a lower cost basis for our acquisition and made for some very attractive risk-adjusted returns,” says Eric Mallon, one of FMC’s founding partners.
Manhattan, or the “Little Apple,” is a city in northeast Kansas, located less than 2 hours from Kansas City. It is best known for being home to the Wildcats of Kansas State University and Fort Riley, but is also establishing itself at the forefront of biosecurity research, as the future home of the National Bio- and Agro-Defense Facility, a state-of-the-art biocontainment laboratory for the study of diseases that threaten both the country’s agricultural industry and public health. The acquisition, FMC’s first in the state of Kansas, aligns with their initiative to expand throughout the Midwestern U.S. in markets that demonstrate a balanced outlook for stability and growth.
Scenic Woods offers a variety of 10 different floorplans to its residents, each with a private patio or balcony, with an amenity package featuring a pool, clubhouse and fitness center, along with carports, coverage garages and storage units available for rent. The competitive community market-leading unit finishes and features include granite countertops, solid wood cabinetry, walk-in closets, significant storage, full-size washer/dryer, and a combination of real wood and tile flooring.
FMC’s business plan will focus on improving operations through the implementation of sophisticated management and marketing strategies, utilizing their institutional-quality asset management platform to control operational expenses, push other income opportunities, and make strategic decisions for the asset. “This acquisition is very representative of the risk-adjusted return investment profile that excites us right now, and our fifth straight acquisition built since 2012. By purchasing these newer assets below market and replacement cost, we eliminate virtually all of the capital and execution risk that comes with buying an older, value-add property, and with our teams’ background and expertise in operations, we identify creative ways to actively increase income and better manage expenses over the hold period,” said Chris Geer, another Four Mile founding partner.