Waldo Plaza Apartments, Kansas City, Missouri

WALDO PLAZA3Waldo Plaza Apartments
Kansas City, Missouri

Address: 207-323 West 77th St.
Kansas City, MO 64114

Year Built: 1966

Number of Units: 48

Unit Mix:

  • 16 1BD/1BA
  •  32 2BD/1BA

Property Size: 4 Buildings

Structure:

  • Exterior: Masonry and Brick
  • Roof: Flat – Mansard composition shingle
  • Parking Lot: Concrete
  • Balcony: Wood framed/Wrought iron

The Waldo Plaza Apartments is part of a 3-property portfolio acquired by the fund. To understand the full potential of all three properties, its important to first understand the impact the new Cerner development is expected to have on the area.

New Cerner Three Trails Campus

Having established itself with the regional real estate community as credible buyers with the Campus View acquisition, the fund was given a pre-marketing opportunity to look at a portfolio of three properties totaling 158 units in Kansas City. Management has been looking to get into South Kansas City since the Cerner Development project was announced – a project that will ultimately cost $4 Billion and add 16,000 good jobs to the area. All three properties are in a crescent around the Cerner area within 7-9 minutes driving time from it. The 3-property portfolio was offered before it was presented to the market, and recognizing the opportunity, was put into contract to keep it from being opened up to the market   

The rendering below is only a small part of the overall project that’s already under construction.

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  • Founded in Kansas City in 1979, Cerner Corporation (NASDAQ) is a global supplier of health care technology solutions serving clients ranging from single doctor practices to major hospitals, pharmaceutical companies, and medical device manufacturers. The company’s solutions are used by more than 447,000 providers and licensed by more than 14,000 facilities in 22 countries.
  • Cerner’s New Trails Campus is the largest economic development in the state’s history.
  • Upon completion, it will include 4.3 million square feet of office space, two data centers, a service center, a training/conference center and employee amenities, including an onsite day care center and health clinic. In addition, the campus will include 370,000 square feet of retail space, providing options for restaurants, stores, and a hotel.
  • In addition to the $4.45 Billion campus development that’s expected to generate 4,500 construction jobs and 16,000 new Cerner jobs during the next decade, a lot of ancillary development is expected.
  • Cerner’s multi-billion dollar investment represents a huge vote of confidence in the strength of Kansas City’s economy and the skills of its workforce.
  • The three properties in the portfolio form a crescent shape around the new development, and should realize a marked increase in demand.

Waldo Plaza Apartments

The 3-property portfolio totaling 158 apartments includes the Waldo Plaza Apartments, the Grand Vue Townhomes, and the Indian Creek Apartments. Being in a solid secondary Metro Area, the Kansas City MSA is the most populated metro in the state of Kansas, and the 29th most populated metro in the United States. With its low crime rate, A-rated schools, Millennial aged populous, affordable living, and being the most geo central location in the US, the greater Kansas City area has become one of the fastest growing job markets. Being selected for Google’s first location for Google Fiber internet service, the area is experiencing a surge in tech start-ups. Kansas City is ranked 14th in the country on the list of where tech companies are going, and ranked 30th out of the Top 50 “Tech Talent Markets” in the US by CBRE Group.

The 48-unit Waldo Plaza Apartments served as the headquarters for the two owners for the last 15 years and is considered the jewel of the portfolio. It’s a turnkey property that’s been meticulously maintained, with a durable brick exterior, new roofs, and an excellent tenant base. The only initial work needed is $1,500 for landscaping.

Waldo Plaza is located next to the Trolley Track Trail with cycling, walking and running close at hand. It’s within close walking distance from shopping, public transportation and parks. Each of the 4 buildings has controlled access and the off street parking is brightly illuminated. Waldo Plaza Apartments is already wired for Google fiber.

The Waldo Plaza Apartments was purchased for $2.8 Million on June 8, 2016, which is around an 8% cap rate in a 6% cap rate market. Management considers that another off market win – a testament to how building the right relationships has been instrumental in the fund’s success.

As an added bonus to the Waldo Plaza Apartments, an onsite home that was being used by the owners as an office will be converted to a rentable space, adding an extra $10,800 of revenue per year. At an 8% cap rate, that’s an increase of $135k in the value of this property above the purchase price.

Although this property requires minimal initial improvements, it is being included in a 10-year rehab plan for all three properties, creating a financial structure intended to minimize future expenses while maximizing the property’s potential, driving up rents and investor returns. With all of the repair, maintenance and CapEx reserves budgeted, the goal is to limit variances in the returns and provide investors with a robust and stable payout. With this plan in place, the first year cash on cash return on investment for Waldo Plaza Apartments is projected to be 13.2% at current rents, increasing to a projected 16.7% in year two.  As of the end of Q2 2016, this property was 98% leased with only 1 vacant unit.

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