Property Details
Below Market Rents  Below Market Occupancy  Repositioning Opportunity  NOI Growth 
Asset Profile
Value Add

Villa Medici Apartments & Townhomes

Overland Park, KS

Multi-Family Property
Midloch Investment Partners Minneapolis, MN
Midloch Investment Partners
  • IRR 17.6%
  • Equity Multiple 2.14x
  • Hold Period 5Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash 5.1%
  • Stabilized Cash on Cash 8% in Y4
  • First Distribution Nov 2020
  • Distribution Frequency Monthly
  • Asset Profile Value Add
  • Loan-to-Value 73.8%
  • Current Occupancy 95.2%

About this Property

"COVID-19 Discount, Defensive Cash Flowing Apartment Investment"

- Andy Sinclair, Midloch Investment Partners

Address 9550 Ash Street
Square Footage 225,037 sq. ft.
Current Occupancy 95.2%
Market Occupancy 95%
Current Average Rent $1,455
Average Market Rent $1,664
Purchase Price $25,000,000
Stabilized Loan to Value 53%

 

Top Questions

All answers are provided by the sponsor, Midloch Investment Partners, or its representatives.

 

Why are you buying the Property?

Andy Sinclair, Midloch Investment Partners: "Villa Medici is located in Overland Park, KS, one of the most desirable Midwest suburban submarkets. Residents in the submarket have an average household income of $115,000, and 69% of residents have a bachelor's degree or higher (1 Mile Radius). Initially under contract pre-COVID, Midloch and Co-GP Artisan Capital, successfully negotiated a $1 million price reduction, resulting in a ±15% discount to appraised and assessed value. Villa Medici will be the 7th apartment investment in the region for the Co-General Partner Artisan Capital Group."

"This property is a Class B, high-quality asset, nestled among well-maintained single-family homes. Villa Medici units rent for nearly $1,000 per month less than its Class A competitor, the Kessler Residences, directly across the street. Villa Medici also rents for approximately $100 less than the nearby Class B- property, the Kenilworth Apartments."

 

What are the most important aspects of this investment opportunity for the investors?

Andy Sinclair, Midloch Investment Partners:

  1. "Price Reduction: The investment has received a COVID-19 price reduction of $1 Million. The new purchase price is a ±15% discount to appraised and assessed value."
  2. "Strong Rent Collection: Despite the volatility in the market because of COVID-19, Villa Medici has collected ±99% of the rent in April and May 2020. From February 2020 to June 2020, 97.6% of the current tenants have renewed their lease."
  3. "Renovation & Improvements: Midloch has budgeted approximately $2.6 Million for renovations, property upgrades, and to cure deferred maintenance. Midloch projects this renovation will increase the property’s value and rental rates."
  4. "Limited Apartment Competition: Villa Medici has limited competition from other apartments given the limited amount of apartment communities and the high amount of single-family homes in the market. Villa Medici is one of only three apartment communities in the immediate submarket and is one of only two Class B apartments in the submarket."
  5. "Iconic Property & Grand Floorplans: This well-known Kansas City development boasts a tranquil water feature that flows throughout the property, providing water views for the tenants. The property has pandemic sized units with the average floorplan of 1,356 square feet. Larger floorplans include:
    • 1 Bedroom + an Office;
    • 2 Bedrooms;
    • 3 Bedrooms;
    • Townhomes
  6. "Debt Amortization: The investment will benefit from an amortizing loan that will pay down the loan balance by nearly $2.0 Million."

 

What is your investment strategy/business plan for the Property?

Andy Sinclair, Midloch Investment Partners:

  1. "Acquire at a Discount vs. Market Pricing: The investment has received a COVID-19 price reduction of $1 Million. The new purchase price is a ±15% discount to appraised and assessed value."
  2. "Install Local Property Management Team: Under Midloch & Artisan's ownership, the property will no longer be managed remotely by out of state owners. This will be the 7th apartment investment in the region for Co-GP Artisan Capital Group."
  3. "Renovate & Raise Rents: The property has not benefited from a value-add renovation program. Midloch has budgeted approximately $15,700 per unit to renovate unit interiors, cure deferred maintenance, and upgrade common areas."
  4. "The Power of Amortization: The property is projected to amortize the loan by roughly $2M during the hold period."

 

How has COVID-19 impacted your business plan?

Andy Sinclair, Midloch Investment Partners: "The global spread of COVID-19 has caused uncertainty across the real estate market. Due to this Midloch received a $1M price reduction from $26M to $25M to appropriately compensate for the increased uncertainty leading up to the acquisition. Below is a summary of Midloch’s conservative underwriting."

  1. "Midloch is underwriting a lower occupancy than the property has as of June 2020. Midloch is also underwriting slightly lower rents in year 1 and zero rent growth in the first year."
  2. "Midloch increased their budget to approximately $2.6 Million or $15,700 per unit to renovate unit interiors, cure deferred maintenance, and upgrade common areas."
Villa Medici has had over 97% of their tenants with lease expirations renew at the property and has collected over 98% of due rent since March of this year. During this time, the occupancy at the property has grown from ~90% to ~95%.

 

What are the risks and how are you mitigating those risks?

Andy Sinclair, Midloch Investment Partners:

"Risk: Villa Medici is an older Class B, can it maintain relevancy?"
"Mitigant: This Overland Park submarket has very limited inventory with little to no developable land. As a result, the immediate submarket only has three apartment complexes: Villa Medici and Kenilworth (same vintage) and The Kessler Residences, a Class A complex which was recently built as part of a master redevelopment of a former country club. Given Overland Park’s longtime demand as a top suburban city, the rental market has remained tight."

"Risk: What if unit renovations take longer to complete than expected?"
"Mitigant: The Property benefits from an incredibly loyal tenant base and boasts annual tenant renewal rates over 80%. As a result, Midloch has underwritten unit renovations to occur slowly throughout the 5-year hold period, and current modeling only projects 90 of 166 units to have been renovated by the Year 5 exit."

"Risk: Given how large the physical property is, could there be unforeseen capital expenditures?"
"Mitigant: Midloch achieved a $1 million price reduction as a result of COVID. Portions of those savings have been reallocated into contingency and working capital accounts. In all, Midloch has budgeted approximately $2.6 million for CapEx/Upgrades over the hold period (~$15,000/unit)."

 

NOTE: All answers provided by the sponsor, Midloch Investment Partners, or its representatives.

About this Property

"COVID-19 Discount, Defensive Cash Flowing Apartment Investment"

- Andy Sinclair, Midloch Investment Partners

Address 9550 Ash Street
Square Footage 225,037 sq. ft.
Current Occupancy 95.2%
Market Occupancy 95%
Current Average Rent $1,455
Average Market Rent $1,664
Purchase Price $25,000,000
Stabilized Loan to Value 53%

 

Top Questions

All answers are provided by the sponsor, Midloch Investment Partners, or its representatives.

 

Why are you buying the Property?

Andy Sinclair, Midloch Investment Partners: "Villa Medici is located in Overland Park, KS, one of the most desirable Midwest suburban submarkets. Residents in the submarket have an average household income of $115,000, and 69% of residents have a bachelor's degree or higher (1 Mile Radius). Initially under contract pre-COVID, Midloch and Co-GP Artisan Capital, successfully negotiated a $1 million price reduction, resulting in a ±15% discount to appraised and assessed value. Villa Medici will be the 7th apartment investment in the region for the Co-General Partner Artisan Capital Group."

"This property is a Class B, high-quality asset, nestled among well-maintained single-family homes. Villa Medici units rent for nearly $1,000 per month less than its Class A competitor, the Kessler Residences, directly across the street. Villa Medici also rents for approximately $100 less than the nearby Class B- property, the Kenilworth Apartments."

 

What are the most important aspects of this investment opportunity for the investors?

Andy Sinclair, Midloch Investment Partners:

  1. "Price Reduction: The investment has received a COVID-19 price reduction of $1 Million. The new purchase price is a ±15% discount to appraised and assessed value."
  2. "Strong Rent Collection: Despite the volatility in the market because of COVID-19, Villa Medici has collected ±99% of the rent in April and May 2020. From February 2020 to June 2020, 97.6% of the current tenants have renewed their lease."
  3. "Renovation & Improvements: Midloch has budgeted approximately $2.6 Million for renovations, property upgrades, and to cure deferred maintenance. Midloch projects this renovation will increase the property’s value and rental rates."
  4. "Limited Apartment Competition: Villa Medici has limited competition from other apartments given the limited amount of apartment communities and the high amount of single-family homes in the market. Villa Medici is one of only three apartment communities in the immediate submarket and is one of only two Class B apartments in the submarket."
  5. "Iconic Property & Grand Floorplans: This well-known Kansas City development boasts a tranquil water feature that flows throughout the property, providing water views for the tenants. The property has pandemic sized units with the average floorplan of 1,356 square feet. Larger floorplans include:
    • 1 Bedroom + an Office;
    • 2 Bedrooms;
    • 3 Bedrooms;
    • Townhomes
  6. "Debt Amortization: The investment will benefit from an amortizing loan that will pay down the loan balance by nearly $2.0 Million."

 

What is your investment strategy/business plan for the Property?

Andy Sinclair, Midloch Investment Partners:

  1. "Acquire at a Discount vs. Market Pricing: The investment has received a COVID-19 price reduction of $1 Million. The new purchase price is a ±15% discount to appraised and assessed value."
  2. "Install Local Property Management Team: Under Midloch & Artisan's ownership, the property will no longer be managed remotely by out of state owners. This will be the 7th apartment investment in the region for Co-GP Artisan Capital Group."
  3. "Renovate & Raise Rents: The property has not benefited from a value-add renovation program. Midloch has budgeted approximately $15,700 per unit to renovate unit interiors, cure deferred maintenance, and upgrade common areas."
  4. "The Power of Amortization: The property is projected to amortize the loan by roughly $2M during the hold period."

 

How has COVID-19 impacted your business plan?

Andy Sinclair, Midloch Investment Partners: "The global spread of COVID-19 has caused uncertainty across the real estate market. Due to this Midloch received a $1M price reduction from $26M to $25M to appropriately compensate for the increased uncertainty leading up to the acquisition. Below is a summary of Midloch’s conservative underwriting."

  1. "Midloch is underwriting a lower occupancy than the property has as of June 2020. Midloch is also underwriting slightly lower rents in year 1 and zero rent growth in the first year."
  2. "Midloch increased their budget to approximately $2.6 Million or $15,700 per unit to renovate unit interiors, cure deferred maintenance, and upgrade common areas."
Villa Medici has had over 97% of their tenants with lease expirations renew at the property and has collected over 98% of due rent since March of this year. During this time, the occupancy at the property has grown from ~90% to ~95%.

 

What are the risks and how are you mitigating those risks?

Andy Sinclair, Midloch Investment Partners:

"Risk: Villa Medici is an older Class B, can it maintain relevancy?"
"Mitigant: This Overland Park submarket has very limited inventory with little to no developable land. As a result, the immediate submarket only has three apartment complexes: Villa Medici and Kenilworth (same vintage) and The Kessler Residences, a Class A complex which was recently built as part of a master redevelopment of a former country club. Given Overland Park’s longtime demand as a top suburban city, the rental market has remained tight."

"Risk: What if unit renovations take longer to complete than expected?"
"Mitigant: The Property benefits from an incredibly loyal tenant base and boasts annual tenant renewal rates over 80%. As a result, Midloch has underwritten unit renovations to occur slowly throughout the 5-year hold period, and current modeling only projects 90 of 166 units to have been renovated by the Year 5 exit."

"Risk: Given how large the physical property is, could there be unforeseen capital expenditures?"
"Mitigant: Midloch achieved a $1 million price reduction as a result of COVID. Portions of those savings have been reallocated into contingency and working capital accounts. In all, Midloch has budgeted approximately $2.6 million for CapEx/Upgrades over the hold period (~$15,000/unit)."

 

NOTE: All answers provided by the sponsor, Midloch Investment Partners, or its representatives.

Offered By

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Assets Under
Management

Currently
$416MM 30+ assets
Exited
$180MM 10+ assets
Portfolio LTV
59.9%  
Historical
Realized Returns

Total IRR
48.9%  
Equity Multiple
1.92x  
Annual Cash
N/R  
Years Of
Experience

As Principals
30+ years  
In Business
1 years  
Size
33 Staff * Dedicated investor relations
* All information is reported by Midloch Investment Partners as of 6/18/2020.
Assets Under
Management

Currently
$416MM 30+ assets
Exited
$180MM 10+ assets
Portfolio LTV
59.9%  
Historical
Returns

Total IRR
48.9%  
Equity Multiple
1.92x  
Annual Cash
N/R  
Years Of
Experience

As Principals
30+ years  
In Business
1 years  
Size
33 Staff * Dedicated investor relations
* All information is reported by Midloch Investment Partners as of 6/18/2020.

Financials

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Location Details

Overland Park, KS

Andy Sinclair, Midloch Investment Partners: "The property is located in Overland Park, Kansas (Kansas City MSA), which is considered one of the premier suburbs in the Midwest. Average household incomes are $115,555, and 69% of residents have a bachelor's degree or higher (1 Mile Radius). Residents benefit from highly rated schools and neighbors that include Sprouts Farmers Market, CVS, and the luxury master-planned development Meadowbrook Park."

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Offering Agreement Documents

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