Hamilton Pines Apartments
3301 Pinewood Ave Hamilton County, TN 37411
ARIAM in partnership with The Reliance Solutions Group has the opportunity to acquire Hamilton Pines (“Hamilton”) in Chattanooga, TN for $2.75 million. The property was acquired for $1.7 million by the Seller in 2018, who has spent approximately $350k in capital renovating the property since acquisition. To date, the seller has renovated 31 of 56 units, replaced all roofs, mailboxes and renovated the onsite laundry facility. We’re budgeting $475,000 ($8,482/unit) to renovate the balance of the units and add amenities such as a playground, dog bark and gazebo/grilling area. In place rents are currently $579 on average, while the market supports rents north of $760.
15/85 Waterfall Participation
- Cash flowing property allows for 6% preferred return to be paid current.
- Stabilized property allows for permanent debt financing at 3.5% fixed.
- Well maintained property with substantial renovation completed already: new roofs, new mailboxes, new laundry facility, 31 of 56 units renovated.
- Sponsor team includes experienced multifamily Operator and General Contractor.
- Below market rents provides the opportunity to raise rents to market (24.5% premium).
- All units are individually metered for water.
- The property is conveniently located just outside of Downtown Chattanooga (3.7 miles to City Center) offering residents quick and easy access to the city’s employment centers, restaurants, shopping and entertainment venues including the world-renowned Tennessee Aquarium. The property is also within 2.6 miles to the University of Tennessee Chattanooga (2019 enrollment of 11,638 students), 2 miles of the 4,000+ staff Chattanooga Memorial Hospital and 5.2 miles to Chattanooga Airport. Chattanooga has seen tremendous growth in population, employment, wages, and rental rates over the last few years.
- Continue and improve upon unit renovation program to further drive rents
- Add amenities to better compete with surrounding properties
- Add other income charges such as trash, pest control, pet rent and “risk” fees in lieu of security deposits
- Convert existing office back to rentable unit
- Room to add storage units for additional income. Not underwritten
The Sponsorship group is a JV between an experienced multifamily operator (ARIAM) and an experienced multifamily General Contractor (The Reliance Solutions Group) with 867 units currently owned.
Founded in 2016, ARIAM is an Atlanta-based real estate investment company focused on distressed and value-add multifamily properties across the Southeast. ARIAM's fully integrated platform includes asset management, construction management, acquisition, disposition, financing, and advisory services. ARIAM's mission is to provide best-in-class housing to lower and middle income communities while delivering outsized returns to investors through disciplined underwriting, oversight, and management. To date, ARIAM has acquired over 2,400 multifamily units and currently owns 867 units across five properties.
Joe Harker: CEO
Joe Harker is a real estate veteran with more than 16-years of experience across office, industrial, retail, multifamily, condo, structured finance, ground leases, and development. He holds a B.A. in Finance from Florida State University. Prior to forming ARIAM, he was Assistant Vice President of Asset Management for iStar Inc., a large publicly traded REIT. During his tenure, Joe sold over $750M worth of commercial real estate and $154M of senior notes, leased over 2.5M SF of space, underwrote 8 local multifamily and condo assets as part of a $4.5B FDIC portfolio bid, managed over 9M SF of space with an estimated FMV of more than $850M, and managed the sellout of 126 condo units while residing over the HOA Board. Prior to joining iStar, Joe was a Senior Financial Analyst at RHA, Inc., an Atlanta based LIHTC Developer, where he helped manage the financial and operational performance of more than 10,500 affordable housing and student housing units.
Reliance Solutions Group
Reliance Solutions Group is an Atlanta based real estate investment company that was founded in 2019. Here at Reliance Solutions Group (RSG) we are focused on value add multi-family properties in emerging markets throughout the South Eastern part of the country. Our areas of expertise include construction management, disposition, and acquisitions.
Claudio Gamboa: CEO
Claudio Gamboa is a veteran of the commercial construction industry with over 15 years of experience that includes almost every aspect of construction from new construction to apartment renovations.
In addition to forming Reliance Solutions Group to acquire multi-family properties, he still owns and operates G&C Contracting which has a focus on multi-family renovations and construction management. They are currently in the Atlanta market and managing multiple properties for MAA as well as single family homes in the Atlanta metro area.
Kenric Bagley: COO
Kenric Bagley is a veteran of the US Air Force where he was trained and specialized in logistics and tactical aircraft maintenance. He also attended North Carolina A&T where he studied Business Administration and brings 8 years of real estate experience that was acquired while working in the family business in North Carolina where he was born and raised.
Hamilton Pines Apartments
The $2.75M purchase represents a 8% cap rate on in-place NOI and an 10.2% cap on year 2 stabilized NOI. The project generates a levered IRR of 17.7%, 11.0% average COC return, $1.1 million whole dollar profit and a 2.1x multiple over a 5-year hold period.
Hamilton Pines is a 56-unit garden style apartment complex conveniently located near Downtown Chattanooga. The property was built in 1967 and consists of 6 apartment buildings. The property consists of all 2-bedroom, 1-bath units with large 900 sf floor plans that exceed the market averages. The property is currently 98.2% occupied at rents nearly 25%, or $181 dollars, below market levels. The current owner has already demonstrated the ability to achieve rents of $725 on several renovated units. As we renovate the balance and add amenities to the property, we plan to bring the remaining units inline with market rent while maintaining mid to high 90% occupancy rates.
|Address||Property Type||Units||Buildings||Current % Occupied||Avg. Unit Size|
3301 Pinewood Ave
Hamilton County, TN 37411
Chattanooga is one of the best secondary markets in the Southeast with strong job growth and excellent connectivity to surrounding metros. It's location and position along the Tennessee River has made is it a strategic transportation hub for industry and commerce. Chattanooga is situated at the center of 5 key cities (Atlanta, Nashville, Knoxville, Birmingham, Huntsville). Interstates 75, 24, and 59 converge at Chattanooga and CSX and Norfolk Southern rail lines serve the area. In 2010, Chattanooga became the first "Gig City" in the U.S., providing citywide one gigabit per second internet service. By 2015, the Electric Power Board of Chattanooga (EPB) began providing all of its customers with access to 10 gigabit speeds. Since 2014, over $3B in business investments have been added, bringing more than 11,000 jobs. According to the U.S. Census Bureau, Chattanooga's population grew at a compound annual growth rate ("CAGR") of 1.2% from 2011 to 2017, outpacing the U.S. at 0.8% CAGR. Median home values rose over the same period by a 2.8% CAGR, while the U.S. grew at 0.6% per year. Median household income grew at 2.2% per year versus the U.S. at 1.5%. Chattanooga's unemployment rate decreased by 3.6% from 2011 to 2017.
- Erlanger Health System
- BlueCross BlueShield of Tennessee
- Tennessee Valley Authority
- McKee Foods
- Unum Group (Fortune Ranking 273 / 500)
- Pilgrim's Pride
- Cigna HealthCare
- Coca-Cola Bottling
- University of Tennessee at Chattanooga
The Volkswagen Effect
Volkswagen opened its $1B assembly plant in 2011, which serves at the company's North American Headquarters and employs more than 2,500 people. The company is currently underway on an $800M assembly plant expansion to manufacture compact electric SUVs. The expansion will create more than 1,000 jobs for Chattanooga.
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