Apartment deal nets $11 million

The Hermitage A apartment complex at 500 Brookboro Terrace off Murfreesboro Road in Nashville has been purchased by locally based First Management Services for $11.25 million.

Sold to First Management by GE Capital Real Estate, the 302-unit complex was built in 1984 and changed hands for an estimated $37,252 per unit.

"This deal was typical of what's going on in the Nashville market," says Brennon Fitzpatrick, director of investment services for Grubb & Ellis/Centennial. Fitzpatrick facilitated the deal and acted as an adviser to the buyers.

He says another potential buyer showed interest in the property but backed out of a deal because of the soft Nashville apartment market. Given falling rental rates and increased vacancy throughout Nashville's apartment market the price for the property was dropped significantly, says Fitzpatrick, giving his client an opportunity to make the purchase.

Fitzpatrick wouldn't name the original purchaser or the previous sales price.

"There's a lot of vacancy causing (more) concessions in the marketplace right now," he says.

Several factors contributed to First Management's interest in the property, but two items were of primary importance: property amenities and current rents.

"Current rents for Hermitage A are below-market compared to available amenities, which gives the new owners the opportunity to raise rents after they make some improvements to the property," says Fitzpatrick.

Average rents for Hermitage A are $652 per unit for an average 1,123 square foot apartment. Fitzpatrick says those numbers represent a good deal for First Management given that similar apartments built after 1980 bring average rents of $651 per unit for 886 square feet.

First Management will lease and manage the property. Company president and owner Kirby Davis and other First Management officials could not be reached.

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