Mark IV Apartments

Mark IV Apartments
Parkville, Missouri

Address: 9203 NW 60^th Street
Parkville, MO. 64152

Year Built: 1973

Number of Units: 168

Unit Mix: 168 2BD/1BA

Property Size: 42 Buildings (all 4-plexes)

Structure:

• Exterior: Wood framing and wood brick siding
• Roofs: Pitched composition shingle
• Parking Lot: Concrete
• Balconies: Wood    

Also included in the 3-property Kansas City portfolio acquired by the fund was the 168-unit Mark IV Apartments, which combined with the others totals 386 apartment units. The other two properties include the Lexington Square Apartments and the Rivermont Apartments, all three of which benefit from the strong economics of the Kansas City Metro market described in detail in the previous write up about Lexington Square.

Mark IV Apartments is conveniently located in Parkville, Missouri where it can take advantage of the strong Kansas City market. Parkville is known for its antique shops, art galleries, and historic downtown. The city is home to Park University and English Landing Park. Mark IV Apartments is in close proximity to major roadways, giving its tenants multiple employment opportunities. The property is also directly located next to various mixed retail and other service sector jobs that support the mostly blue collar work force.

With construction of new units basically matching the local metro’s growth rate (1.1%), there is little risk of competition that would drive down occupancy. Just as with Rivermont and Lexington Square, Mark IV capitalizes on the fact that the majority of new construction is not focused on affordable or workforce units, instead consisting mostly of amenity rich Class-A apartments that are significantly more expensive.

One of the many unique features of the 168-unit Mark IV Apartments is that it consists of 42 separate buildings. Each building is a four-plex, which is very desirable, and with 42 buildings,  its spread out over a very large piece of land as can be seen in the photo.

The 3-property portfolio was purchased off market on February 17, 2017. The selling group had some partnership issues and needed to turn some of their portfolio into cash. As a result, management worked directly with the sellers and negotiated prices that meet the fund’s return hurdle rate and are at a discount to prevailing market rates. The Mark IV Apartments was purchased for $6.7 Million, which is well below the cost of replacement.

Mark IV Apartments meets our criteria for return, with initial cash on cash return on investment (ROI) projected at 14.9% at current rents. After bringing rents up to market level and realizing management efficiencies from owning multiple properties in this market, the cash on cash ROI is projected to rise to 18.6% in year two, with a projected 10-year IRR of 25%.