In March 2023, the CalTier Fund 1 invested in Hickory Point Apartments, a 175-unit multifamily community located in Newport News, Virginia. Hickory Point fits CalTier’s continued investment focus on value-add multi-family opportunities across the United States and focuses on the growth potential in the Southeast.
Newport News is one of the better-performing submarkets in the greater Richmond, Virginia, region due to the increase in demand for apartments, which severely outweighs the current supply across the region.
Hickory Point is a uniquely desirable asset, comprising of 2-3-bedroom floor plans across 175 townhomes. Units at Hickory Point average over 1,000 SF, which makes the community feel much more like single-family living. The townhomes appeal to families because they feel more like single family style living. Hickory Point is well positioned less than 1 mile from the Fort Eustis station gate. Fort Eustis provides primary support to over 50,000 active-duty soldiers, the national guard, and the reserves.
Hickory Point has great renovation upside and synergistic operational efficiencies being closely located to 6 other assets owned and managed by our partner Ritz Banc Group. 56 units (32%) have already been lightly renovated and are achieving a $200-$400 rental premium. The plan is to renovate all remaining classic units and add granite countertops and stainless-steel appliances to the currently renovated units. There is also a significant upside associated with converting the remaining 17 of the 2×1.5+Den floor plan units to 3×1.5 floor plans.
In the Newport News submarket, limited supply has pushed vacancy levels to record lows of ~4%. This supply/demand imbalance has driven significant rent growth. Over the past three years the submarket averaged annual rent growth over 8.9%, well above the national average. Year-to-date, Newport News has seen 12%+ rent growth and over the next three years it is projected to average ~4% rent growth, dramatically outpacing many other markets.
Hickory Point sits in an ideal location in Newport News, proximate to major employment drivers and walkable to retail and dining options. The Property sits in an infill location at the front gate of Fort Eustis and less than 1 mile away from the Newport News International Airport. This location, coupled with the townhome layouts, caters to a wide variety of potential renters, including families and young professionals – two ideal tenants for this asset class.
Driven by a variety of industries and strong trends/fundamentals, the Hampton Roads region is one of the fastest-growing and strongest economic centers in the Mid-Atlantic. Primarily recognized as a shipping and military hub, Hampton Roads’ burgeoning economy is more diverse, driven not only by a strong shipping/logistics sector and major military presence but also by a robust healthcare sector and multiple colleges and universities, including Christopher Newport and Virginia Wesleyan.
Hickory Point is also near the Newport News/Williamsburg International Airport (~450k passengers) and located 5 miles away and easily accessible via I-64. Additionally, the Property is walkable to shopping/dining options, including Merry Oaks Shopping Center and Patrick Henry Mall. The entire neighborhood is located close to the water on all sides and single-family homes creating a safe and attractive atmosphere highly desirable for tenants.
Prior ownership has kept the Property well maintained and has invested capital to cure deferred maintenance items, including common area upgrades (pool and patio), parking lot repairs, and curb appeal improvements. The plan is to cure any additional items to position Hickory Point for sale to an institutional buyer.