The cap rate was 7%, says Rick L. Vidrio, associate partner with Hendricks & Partners. He says PRG received an $11.5-million Freddie Mac loan with a 10-year term and interest-only payments for three years to acquire the 2400 Mellwood Ave. complex. The financing's fixed-rate interest is 5.85%.
The seller was "under capitalized for a number of properties" and sold the River Oak in addition to some other properties, Vidrio says. River Oak consists of 14 buildings constructed in 1989. It has one- and two-bedroom units, ranging from 460 sf to 1,017 sf and an average of 705 sf.
Vidrio says the complex is running at 81% occupancy. The submarket's average is 93%. PRG "saw an opportunity to reposition [the property] and perhaps generate more rent," he adds. The asset's average rent is $691.
Vidrio says PRG plans to reposition the property by painting the buildings, doing "light renovations" to interiors and renovating the clubhouse. River Oak is located near Interstates 64, 65 and 71. It's two miles from the Louisville CBD and six miles from the Louisville International Airport.
Vidrio, Rick Brace and Todd Stofflet, all with Hendricks & Partners in Louisville, represented the seller. Earlier this year, PRG purchased a 180-unit apartment complex in Lexington.
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