Recently we closed on a 97-unit apartment community in Memphis, TN. This is one of the most iconic buildings in the city and is located in a fantastic part of town, however, the building is in C class condition, so a modern update, while keeping a historic look is necessary. The common space greats you with a decent looking entry and office, followed by a nice fitness center, but the rest of the area is a lot of wasted space and outdated. Open the unit doors and welcome a kitchen from the 80’s, flooring that is parquet, but is worn and tattered, the bathrooms are a blast right out of the 1940’s and the windows are leaky and in poor condition.
This is our second building in the area that is tired and hasn’t been given much love in recent years, but, just as with our other asset, that is about to change. Our plan is to add a pool and parking to the exterior, replace the windows, renovate the common spaces and gut the kitchens and baths. The trick on this project is to be true to the late 1930’s architecture, while also bringing the finishes to a modern era. The great news is that much of the plumbing, HVAC and electrical has been updated and the structural integrity is second to none. For an old building those are the most important things to have on your side!
Our goal is two-fold. First, provide excellent returns to our investors and ourselves. This will be done by executing the renovations quickly and efficiently, changing the perception of the building and hiring critical staff. The second, and perhaps more important part, is that we want to make an impact on the community and bring this iconic building into the future for the next generations to enjoy. The building has not been updated and the previous management did not take care of the residents. This change needs to happen immediately. Providing all of our residents with a safe, clean and modern place to live, along with staff members that care and fulfill their needs is important to us. We want the community to be proud of the apartment building again!
So, what have I taken from this that may help you with your business?
- Hold firm on your negotiations: Don’t get caught up in the market steam. Sellers hold the cards right now, but that doesn’t mean you have to pay what they want. This seller wanted a lot more. We didn’t want to pay more. Months of negotiations went by before we got the deal locked up, but it was ultimately at a price that we could make work.
- Prepare: There is a lot of front-end work that goes into a large renovation in a historic district. Our goal was to get a head start on the approval processes and blue prints prior to closing. Do the ground work up front, get your contractors and pricing lined up, so that when you do close, you can move the project forward.
- Be open to opportunities: Originally this property was off our radar due to the age of the building, but after we closed on a property down the street and really began to see the value in the area, we cautiously explored the property. We found that most of the mechanical systems had been upgraded and that structurally, the building was in as good of shape as most 20-year old buildings.
- Build relationships: Relationships are what got this deal done. The real estate broker brought it off market. The mortgage broker brought us a lender that is a great partner and bought into the concept. The relationships with our investors allowed us to raise $4.5 mm in 3 days with nearly a 100% commitment level.
I am excited for this partnership with all of my partners – both active and passive!
To your success!
Please consider historically accurate windows such as
The integrity of the history of the building should be upheld just as highly as the structure itself. I am in no way affiliated with Marvin I just have seen their incredible historical window restorations.
I’ve lived here for 3.5 years and have not been offered an option to renew my lease, which ends in a couple months. I know that once I leave, you’ll renovate my one bedroom apartment, currently priced at $770/mo. When you’re done, I’m positive it’ll be at least double that, just like all the other developer driven schlock that keeps popping up in midtown. Welcome to the neighborhood. Thanks for pricing us out of it. Your updated HVAC didn’t work for over a week and I still haven’t heard if I’m going to be compensated for not having a livable space because of the heat. As another resident above mentioned, our trash room is full, hasn’t been taken out, and while your property manager has been cordial, ultimately they’ve been ineffectual. I can only hope if you’re going to charge luxury prices, you upgrade to luxury appointments and offer luxury service. But after having lived at Crosstown Concourse prior to this, I have very little hope for anything more than you maximizing your profits at all costs. I’ve had a lovely three and a half years here. Good luck.
Congrats on the great property, Todd (and the rest of the team)!
Keeping to the renovation budget will require discipline. It’s always hard to know ‘when to stop’. Under renovate, and you won’t get the rent increases you hoped. Over renovate, and you will blow past your budget.
It’s great you have an experienced team and it’s ‘not your first rodeo’. Looking forward to seeing how this asset performs!
You now own one of the most beautiful Art Deco buildings in Memphis. Please use care in considering architecturally appropriate windows for your renovation. The community will hold you in high esteem if you work with them.
Thanks for giving us a place to add our comments.
Lea’s Woods Historic District
Please, please, please DO NOT replace the windows with something that does not blend in with the Art Deco style. The residents of Midtown are active, care deeply about our iconic architecture and will flood the Office of Planning and Development with letters and phone calls if your application contains changes that will alter the grand style of this building. Please work with Central Gardens and the neighborhood and not against us.
Why is it necessary to cut down all the old, beautiful trees? Devastating to watch.
Unfortunately trees that are destroying the building need to be removed and trimmed back. The trees that are not dying or destroying the building will certainly stay
Your article says that the last management didn’t take care of the residents here at Kimbrough, which is true, but ever since the latest change in ownership aka your company buying Kimbrough, the place has gone even more to shit. Our trash hasn’t been taken out or picked up in over a month which is coincidentally right around the same time the change in ownership took place. It’s great that someone is finally willing to put the money it will take into getting this building fixed up nicely but don’t forget that there are still residents who live here… a lot of them who are extremely frustrated having to deal with blatant disregard for basic housing codes and upkeep by the management here.
Please have patience. We are aware of many of the issues and will do our best to make this a great place for you and all the residents to live
This is an iconic Art Deco building! Please preserve the exterior architecture and style including the window appearance — preservation and modernization are not mutually exclusive terms.
Agreed, we are spending a lot of time with the planning phase to make sure we keep with the historic nature of the building