Formed in 2020, Louisville, Kentucky-based apartment owner CF Capital is relatively new to the apartment ownership game.
The firm typically targets properties with operational or physical value-add upside in the Midwest. “Our region is a huge separator for us, and one of the reasons why capital, I think, is attracted,” Tyler Chesser, CF Capital’s co-founder and managing partner and a former investment sales broker, told Multifamily Dive.
Although CF Capital was looking for value-add deals, it was tough in 2024. “We've been very busy but not as productive on the acquisition trail as we would like, as I think many of our peers would also agree,” Chesser said.
However, in December, CF Capital purchased Island Club Apartments, a 314-unit multifamily property in Indianapolis, for roughly $50 million. The property had a senior and supplemental Freddie Mac loan, which CF Capital assumed.
“It was time-consuming, but we’re very happy about where that stands,” Chesser said, pointing out that the loan was originated three years ago. “So, at a time when rates were very attractive, that fixed rate condition is a huge asset for that particular investment.”
An upgrade opportunity
Island Club, located on 37.6 acres along a lake, is close to major employers and offers easy access to downtown Indianapolis. The market's manageable supply and steady population growth are attractive to CF Capital.
“We love Indianapolis,” Chesser said. “It’s been a stalwart over the years. It’s a steady market with a dynamic economic base, and it continues to chug along.”
Island Club’s amenities include a pool, fitness center, pickleball court, dog park and an aqua lounge with kayak access. “Every single unit has a water view,” Chesser said. “I think there has been a focus on residents living in a place that they truly want to live in and having access to the amenities that the community provides.”
The property underwent a $4.2 million renovation, which included upgraded cabinet fronts, quartz countertops, fixtures and bathroom accents.
However, more than 60% of units are “ripe for upgrades,” according to CF Capital. The firm plans to invest an additional $2.8 million to upgrade amenities, renovate apartment interiors and fix deferred maintenance issues.
“We are overhauling the clubhouse, the leasing office and the fitness center as well,” Chesser said. “We're investing some capital into the pool that overlooks the lake, adding a luxury grilling station to enhance that amenity.”
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