Rivermont Apartments

Rivermont Apartments
Riverside, Missouri

Address: 4424 NW Hon Drive
Riverside, MO. 64150

Year Built: 1979

Number of Units: 108

Unit Mix:

• 19 1BD/1BA
• 35 2BD/1BA
• 13 2BD/1.5BA
• 41 2BD/2BA

Structure:

• Exterior: Wood framing and siding.
• Roofs: Flat – Pitched composition shingle/mansard shingle
• Parking Lot: Concrete

The Rivermont Apartments is also part of the 3-property Kansas City portfolio acquired by the fund, which combined total 386 apartment units. The other two properties include the Lexington Square Apartments and the Mark IV 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.

Rivermont Apartments’ location allows it to benefit from three of Kansas City’s submarkets: Riverside, the Northland, and Downtown Kansas City’s Central Business District. The city’s Central Business District is the most under served submarket within the Kansas City marketplace. As a result, Rivermont is in a very unique position of benefiting from the rental pools of each submarket.

The property also has enviable access to some of Kansas City’s key roadways and bridges, including I-35, I-29, I-635, Highways 169 and 9. Rivermont’s strategic location places it only a few minutes away form a number of Kansas City’s major employers.

Rivermont Apartments is a solid workforce housing play, which is exactly what the fund specializes in. One competitive advantage of the 3-property Kansas City portfolio is that the fund’s leading property management team was already managing all three properties prior to acquisition. Having the property management team in place prior to acquisition led to a seamless takeover and having insider information that should maximize returns more quickly. Initial budgeting will be more precise going directly off of the property manager’s current operations as opposed to estimates based on local metrics. The management team has already stabilized the property and continually increases rents as the market allows.

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 Rivermont Apartments was purchased for $3.05 Million.

Management believes based on Rivermont’s location and the overall strength of the market, this property should be a consistent performer moving forward. The property meets our criteria for return with initial cash on cash return on investment (ROI) projected to be 10.9%, and with a more aggressive management style than the prior owners, the cash on cash ROI is projected to rise to 13.7% in year two, with a 10-year IRR projected at 19.4%.