Towne Oaks Apartments, Little Rock, Arkansas

Towne Oaks Apartments
Little Rock, Arkansas

Address: 9300 Treasure Hill Rd.
Little Rock, AR 72227

Year Built: Phase I (152 units) – 1975
Phase II (64 units) – 1982

Number of Units: 216

Unit Mix:

• 108 1BD/1BA
• 92 2BD/2BA
• 16  3BD/2BA

Property Size: 23 Buildings, 2 Story, plus 1 Leasing Office Building

Structure:

• Exterior: Wood and vinyl siding over wood frame
• Roof: Pitched Asphalt Shingle replaced in February 2016
• Parking Lot: Concrete
• Windows: Double hung and/or sliders

The 216 unit Towne Oaks Apartments is located in Little Rock, Arkansas, a solid secondary metro area. The property is in a desirable area within walking distance of shopping centers and close to the interchange that provides easy access to several of the city’s top employers.

According to HUD’s State of the Market Report from January 2016, this is a balanced economic region that benefits heavily from the stability of the education, health care and government sectors located there. These are significant drivers of employment in the region that partially insulate it from contractions in the national economy. Presently demand exceeds supply in this area, and according to the HUD report, supply of new housing is not projected to keep pace with demand for the forecast period through September 2018, which should support continued low vacancy rates and higher rental rates well into the future.

The Towne Oaks Apartments was being sold at auction. The same brokers who found the Colony West Apartments and have sold 75-80% of all multi-family properties in Little Rock for the last 10-15 years introduced it. As a result of that relationship, the fund was the only bidder allowed to do a 100% inspection prior to the auction. Overall, the property was found to be in excellent condition. Since acquiring the property in 2013, the owner made significant capital expenditures to improve the property. Exterior improvements totaling $750K were completed. All roofs were replaced in 2016, parking areas resealed and restriped, older balconies replaced, clubhouse and laundry facilities remodeled, and retaining walls replaced. The only remaining repairs identified were replacing older wooden balcony fences with new treated wood or vinyl.

Although the investment committee approved paying up to $11 Million for the Towne Oaks Apartments, it was successfully acquired out of auction for nearly $1Million less, at a price of $10.03 Million, closing on June 16, 2016.

Based on current rents, the projected cash on cash return on investment for this property is 18.4% per annum. And once rents are increased up to market rates, the rate of return is projected to increase to 22.2%. As of the end of Q2 2016, the property was 93.5% occupied with 202 of the 216 units leased.