Four Mile Capital has acquired the Avalon Springs Apartments, a 141-unit multifamily community in Louisville, Kentucky.
Avalon Springs, built in 2018 and currently 99 percent leased, sits on almost 18 acres of land. The property consists of 125 two-bedroom townhome units, each with 1,322 square feet of living space and private entrance and private patio. It also contains 16 two- and three-bedroom flats, also with their own private patios.
Lincoln Property Management has been awarded the management contract.
The transaction closed on April 30 for $22 million, which equates to $156,000 a unit or $120 a square foot. As part of the acquisition, Four Mile Capital placed a new 65 percent LTV mortgage with a fixed 3.14 percent interest rate for 10 years and five years of interest-only payments from Freddie Mac. The loan was originated through Newmark’s Boston office led by Ed Belz.
Instead of re-trading the deal, as many investors are apt to do during times of economic strife, FMC negotiated an occupancy escrow, funded by the seller and to be used by FMC should Avalon’s economic occupancy dip below 95 percent during FMC’s first year of ownership. This was a win-win for FMC and the seller as it gave FMC and its investors peace of mind that any economic downturn experienced at Avalon Springs due to the impacts of the COVID-19 pandemic would be neutralized during its first year of ownership, while it also allowed the seller to realize a larger liquidity event, minimize potential economic loss due to selling in the middle of the pandemic and have certainty of close.
Avalon Springs is located in a low-density residential area in South Jefferson County. It is about 20 minutes from downtown Louisville, 13 minutes from Louisville International Airport and just minutes from several of the major employers in the area including GE Appliances, Ford Motor Co. and UPS’s global Worldport Hub.
The acquisition is FMC’s first in the state of Kentucky.