Janover has closed a $4.1 million refinancing package for Flairwood Apartments, a 120-unit community in Memphis, Tenn., through its financing platform. Arbor provided the 10-year mortgage through Freddie Mac’s Small Balance Loan, or SBL, program. The non-recourse loan, which closed at an LTV ratio of 63.4%, amortizes over 30 years.
Brandon Ramineh, director of capital markets with Janover, was instrumental in closing the deal. The new loan replaces prior debt of $2.4 million, according to Shelby County records. That mortgage, from Velocity Commercial Capital, was taken in July of 2021.
"The borrower’s hands-on experience with the property through nearly a decade of ownership, combined with significant improvements to the community’s units over recent years, made the deal attractive to Arbor," said Ramineh. "The investor benefited from locking in a fixed interest rate upfront and will be able to take significant cash out in the deal, enabling further property improvements and investment into other real estate ventures."
Flairwood, located at 4361 Tchulahoma Road, has a mix of two- and three-bedroom apartments ranging from 924 to 1,457 square feet, according to Apartments.com. Units have hardwood floors, washer-dryer connections, and balconies or patios. The property has storage units, a number of garage parking spaces, and a 0.6-acre lake on-site.
The community is on the eastern side of Memphis International Airport, about 2.5 miles north of Tennessee’s border with Mississippi. A vast industrial district, home to major tenants including Amazon, XPO Logistics, and Medtronic, is in the immediate area.
Bluff City’s Value-Add Potential
Although major Sun Belt metros have drawn significant investment volume in recent years, Memphis has often been overlooked. An article from Marcus & Millichap from this past summer highlighted that the multifamily market’s sales dropped compared to the previous year. At the same time, however, property values have increased. Closed deals for the 12 months ending in June averaged $90,700 per unit, a 10% year-over-year gain.
Much of this ties into value-add investment. More than half of last year’s deals closed at sales prices between $40,000 and $80,000 per unit, the Marcus & Millichap analysis noted, and more than two-thirds of apartments in the market date back to before the turn of the century. Combine that with steady job growth in the logistics and manufacturing sectors, and the result? Ample opportunity to reposition assets, which can, in turn, draw significantly more advantageous financing opportunities.