Aaron Johnson, a principal broker with the Louisville office of Marcus & Millichap, represented all parties in the transaction. He says the apartment market in Kentucky offers the most stability to investors, but also says not much is selling. "These two deals are definitely atypical of what's going on in this market," Johnson tells GlobeSt.com. "We don't see huge rises and falls here, but like the rest of the country, we're seeing a slowdown as a result of the credit tightening. Buyers are hesitant, sitting on the sidelines until they see bottom."
He says the sellers had spent a few million to fix up the properties. The Worthington complex, built in 1968, was completely redone in 1990, Johnson says. "The buyers thought there is an upside to this portfolio. They also see the Pegasus property being repositioned more toward student housing, it's about two miles away from the University of Kentucky," he says. Both properties are about 90% occupied.
Pegasus, at 2504 Larkin Rd. here, features one- and two-bedroom units on 15 acres, with amenities such as a swimming pool, clubhouse, onsite laundry, fitness center, playground and tennis court. The property sold at a cap rate of 6.9%, Johnson says. The units rent for a range of $470 to $670 per month.
Worthington, at 735 S. Second St. in Louisville, has one- to two-bedroom units, with amenities such as gated off-street parking, monitored entry, a business center with internet access and a courtyard. The property sold at a cap rate of 7.6%, Johnson says. The units rent for about $612 to $852 per month.
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