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VOL. 126 | NO. 123 | Friday, June 24, 2011

Orchards of Collierville Sells for $15.7M

By Sarah Baker

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The Orchards of Collierville – a 226-unit apartment community at 400 Orchard Circle W. – has sold for $15.7 million.

Blake Pera and Tommy Bronson III with CB Richard Ellis Memphis’ multifamily division represented Orchards of Collierville LLC in the sale to Memphis’ Fogelman Venture Partners and New York-based DRA Advisors LLC.

The property was 97 percent occupied at the time of the acquisition.

The Orchards was developed in 1991. A Memphis and Washington partnership sold it for $11 million in 1997 to Petaluma, Calif.-based Leading Edge Properties.

The Shelby County Assessor of Property’s 2011 appraisal of the Class B investment grade was $11.2 million.

Rick and Mark Fogelman of Memphis-based Fogelman Properties are the principals of Fogelman Venture Partners. The acquisition was attractive because of Collierville’s “highly attractive demographics,” Rick Fogelman said. Demographics include average household income of $143,000 and average single-family housing price of $360,000 within the complex’s one-mile radius.

“Collierville continues to be one of the most sought-after apartment submarkets in terms of investment,” Rick Fogelman said in a statement. “Collierville’s overall population has grown by more than 22 percent in the past decade. As a result, apartment occupancies and rental rates in Collierville are among the highest in the area.”

The Orchards is across from Collierville Town Hall, city library and the 44-acre Halle Park recreational area. In addition, the property is located just off Poplar Avenue, in close proximity to Collierville’s big-box retailers. The FedEx World Technology Center with 3,000 employees is located 1.5 miles from the property.

The Orchards offers one-, two-, and three-bedroom floor plans ranging from 807 to 1,250 square feet, with rental rates from $760 to $1,010 per month. Community amenities of the 21-acre complex include a swimming pool, two lighted tennis courts and a fitness center.

The Fogelman/DRA partnership is planning several upgrades to The Orchards, including new exterior paint colors, new property signage and major upgrades to the landscaping and resident amenities.

“The buyer has a great plan for repositioning the asset, and they should be very successful once the plan is implemented,” said Pera, senior vice president with CBRE. “The Memphis market is experiencing a positive bounce in occupancy and concession burn-off, and we expect very strong rent growth for a sustainable period of time during this cycle.”

Fogelman Management Group, a subsidiary of Fogelman Properties, will manage the newly acquired property. Founded in 1963 and headquartered in Memphis, the privately owned firm manages 65 apartment communities totaling more than 20,000 apartment homes in the Southeast, Southwest and Midwest regions of the country.

The Orchards marks the second acquisition within the past 30 days for the Fogelman/DRA partnership, which also acquired the 350-unit Legacy Key Apartments in Atlanta for $17.5 million on May 25.

Fogelman Properties’ recent pair of acquisitions is in response to the rebounding multifamily market, making up for its 30 to 35 percent loss in value seen after the multifamily market peaked in 2007 and hit its bottom in 2010, Fogelman said.

“After being on the sidelines for the last three years with virtually no acquisitions, we saw the overall trends with occupancies and rents starting to rise and felt that 2011 was going to be a good time to re-enter the market on acquisitions,” he said.

Values in the “middle-tier markets” – such as Memphis and Birmingham – have recovered some of the loss, Fogelman said, but are still meaningfully below the peak.

“We feel that they will continue to recover as the economy improves and as the overall shift from owning a home to renting that is occurring now continues,” he said. “With the constraints on the new supply, but also the positive trends in occupancies and rents, we believe that is the equation that will continue to lift values for the next four to five years.”

PROPERTY SALES 62 288 2,619
MORTGAGES 52 197 1,783