River Ranch Apartments (Chisolm Ranch)
5100 River Valley Boulevard
Fort Worth, Texas 76132
River Ranch Apartments, renamed to Chisolm Ranch, consisted of 272 units, located in Fort Worth, Texas (southeast quadrant of I-20 and River Valley Blvd adjacent to Hulen Mall in Southwest Fort Worth). River Ranch was constructed in 1980, and is comprised of 18 two story buildings situated on a 12-acre site (24 units per acre). The building exteriors featured brick and hardi plank siding. A roof replacement was included for all buildings in the capital expenditures. The unit interiors feature 100% full size washer/dryer connections with washer and dryer appliances furnished, fireplaces in all units, and vaulted ceilings on the top floors.
Knightvest was awarded the purchase off-market from a long-term owner (20 years). The unit interiors, common areas and landscaping were very dated and in significant need of modernizing. The dated interiors and tired common areas were evident in the Property’s rental rates, which lagged behind submarket rents in competing properties. Current average effective rents at time of purchase at River Ranch were $706 ($0.78 PSF) with submarket average market rent of $850 ($1.09 PSF). The $100 market rent gap combined with average additional rent premiums of $150-200 for upgrades were targeted for year 4 pro-forma rents. The property was put under contract July 13, 2015. Panther FW Investments provided 79.00% of the acquisition equity of $7,050,000.
Panther and Knightvest closed the acquisition on 9/25/2015. The portfolio was 93% occupied at time of purchase. The business plan included extensive interior upgrades including new stainless-steel appliances, granite countertops and tile backsplash, 6” baseboards, front door replacements, upgraded fixtures, lighting, and cabinet fronts. Due to the success of the granite upgrades, an additional upgrade to Quartz countertops were tested and well received achieving as high as a $350 increase over prior rate. The exterior capital improvements included exterior paint, new roofs, clubhouse remodel, pool renovations, landscaping improvements, exterior windows, replace patio rails and balcony surrounds, and asphalt repairs. This was a value-add project with an anticipated hold period of 3 to 5 years.
EXECUTION AND SALE
As mentioned, the average in place rents at acquisition were $706 and at time of sale the property was achieving average in place rents of $1,042, a 48% increase. The latest Quartz upgrades at time of sale were averaging approximately a 30% premium over the prior lease rate. The property sold in June 2019 surpassing economic projections.
This sale exceeded our pro-forma projections providing a 1.76 multiple to Panther FW Investors and an annual average return on investment of 20.42%.