13th Floor Investments ("13FI") is pursuing the acquisition of The Henry at Fritz Farm ("The Henry"), a 306-unit, 2017-vintage midrise multifamily community physically integrated into The Summit at Fritz Farm, Lexington's premier open-air lifestyle center. The asset is offered through Cushman & Wakefield at $76,500,000 ($250,000/unit, $265/SF).
The Henry is the only residential component embedded within a 285,000+ SF retail environment anchored by Whole Foods, Apple, Sephora, Nike, and 20+ restaurants — a structural moat that drives a 13% rent premium over the Class A comp set ($1,889/mo vs. $1,667). The Henry commands a $305/mo premium over Greyson on 27, the nearest comparable Class A community (2020-built, 312 units, 2.1 mi), per CoStar. No remaining parcels within The Summit can accommodate additional multifamily density.
From 2023–2025, NOI grew at a 6.9% CAGR driven by 6.4% average rent growth and disciplined expense management (2.3–2.8% growth). Occupancy held at 96.7–98.7%, 300–550 bps above the submarket. The base case underwrites 3.5% rent growth (half the historical pace) and 5.0% structural vacancy. Operations will be led by NTS Capital, a Louisville-based fully integrated operator (6,000+ units; ranked #8 nationally in J. Turner ORA rankings); Year 1 operating projections were developed in collaboration with NTS as incoming property manager.
At $258,500/unit all-in, the basis is 11% below $292,000/unit estimated replacement cost (like-for-like midrise construction) — meaningful in a market where Lexington's Urban Services Boundary permanently constrains developable multifamily land and residential permitting sits at a multi-year low. Financing is a $57.4M agency loan (75% LTV, 5.26% fixed, 3yr IO), generating 55 bps of day-one positive leverage and a 1.53x Year 1 DSCR. Over a 5-year hold with a 5.75% exit cap, the investment targets a 15.6% gross IRR, 1.98x MOIC, and 6.72% average cash-on-cash, generating $21.3M of total profit on $21.7M of equity.
Lexington sits at the center of Kentucky’s “Golden Triangle”—the economic corridor formed by I-64, I-75, and I-71 connecting the state’s three largest metros. Louisville is 79 miles west (1h15m via I-64), and Cincinnati is 81 miles north (1h20m via I-75), giving employers and residents access to a combined MSA population of over 4 million. The property is in south Lexington along Nicholasville Road (US-27) at Man o’ War Boulevard. Blue Grass Airport (7 mi) offers direct flights to 18 destinations.
The bourbon industry contributes $10.6 billion annually to the state economy, with Bourbon Trail visits reaching a record 2.7 million in 2024—a 370% increase since 2015. The equine industry generates a $3.4 billion regional impact; Keeneland auctions alone produce $1.16 billion annually, with a $100 million Paddock Building debuting Spring 2026.
Lexington’s economy is anchored by five durable pillars spanning education, healthcare, advanced manufacturing, and tourism:
University of Kentucky — ~26,000 employees, 30K+ students, $500M+ annual research funding. UK Healthcare (9,000 employees) is the region's only Level 1 trauma center and NCI-designated cancer center.
Healthcare — Baptist Health (3,189), Lexington Clinic (1,490), CHI (2,029). Largest sector by headcount; has added jobs every year since 2010.
Manufacturing & Corporate — Toyota's production HQ (~10,000 employees, Georgetown, 15 mi north), Hitachi Automotive (1,325), Hyster-Yale (1,661), Nestle (1,137), Amazon (~3,000 across logistics facilities).
Equine Industry — 450+ horse farms in Fayette County; the broader industry contributes an estimated $6.5B annually to Kentucky's economy and employs 60,000+ statewide. Keeneland (8 mi from property) anchors high-net-worth household concentration.
Bourbon — Kentucky produces 95% of the world's bourbon. The distilling industry contributes $10.6B annually. Lexington sits at the center of the Bourbon Trail corridor (2M+ visitors/year), with craft distilleries opening downtown in recent years.
The Lexington MSA population reached approximately 533,000 in 2025, growing at roughly twice the national rate. Consistent household formation supports durable rental demand independent of cyclical employment shifts.
Source: U.S. Census Bureau, American Community Survey
Lexington has more than $6 billion in active capital projects completed or underway, anchored by Toyota's $13.9 billion EV battery manufacturing complex in Central Kentucky, UK HealthCare's multi-phase campus expansion, the Town Branch Trail connecting downtown to the region's trail network, and a broader downtown redevelopment initiative reshaping the city's urban core. These investments are driving sustained job creation, population inflows, and long-term rental demand across the MSA.
Enrollment growth has accelerated sharply—UK added nearly 2,800 students in Fall 2025 alone, the largest single-year increase in the university's history. The growth is structural: UK is expanding healthcare workforce programs (7,600+ students across six health colleges) and first-generation access (1,900 first-gen students, +27% YoY). New campus housing (700+ beds) is being built to sustain the trajectory. For The Henry, a growing young employed population translates directly to rental demand along the Nicholasville Road corridor.
Source: U.S. Department of Education, IPEDS; UK IRADS. Fall 2025 per University of Kentucky.
Lexington’s Urban Services Boundary (USB), established in 1958, prohibits the extension of public sewer and water infrastructure beyond the established urban envelope. Without access to municipal utilities, land outside the boundary cannot support the density required for multifamily development—regardless of zoning. This is not a discretionary policy that a future council could override; it is a voter-protected infrastructure constraint that functionally caps new apartment supply to sites within the existing urban footprint.
Within the boundary, buildable sites are further constrained by a 40-acre minimum for residential development parcels. Fayette County voters recently rejected a proposal to expand the Urban Service Area, reinforcing the permanence of this restriction while protecting the $2.3 billion agricultural economy in Fayette County. The practical effect: the pipeline of developable multifamily land is finite and shrinking, concentrating new demand onto existing well-located assets like The Henry.
Source: CoStar Group; Lexington KY Supply Snapshot; Berkadia Construction Pipeline Report; LFUCG permit records
Note: CoStar delivery counts may differ from building permit data due to tracking methodology, project phasing, and classification differences between permitted and delivered units.
Source: LFUCG Division of Building Inspection, permit records 2016–2025
Note: Permit counts reflect individual building permits filed, not completed properties or total units. A single multifamily project may generate multiple permits across phases. These figures are directional indicators of development activity, not a direct measure of housing unit delivery.
The Henry comprises four midrise buildings with two dedicated parking decks. Two buildings feature ground-floor retail integrated into The Summit at Fritz Farm; the retail component is not included in this offering. Units are finished to Class A standards with 9-foot ceilings, stainless steel appliances, 1.5-inch white granite countertops, 42-inch custom cabinetry, and full-size in-unit washer and dryer. Community amenities include a resort-style pool and spa, outdoor fitness area, bocce court, grilling pavilion with pergola, and a full-service resident clubhouse.
| Type | % of Mix | Units | Avg SF | Occupancy | Rent | $/SF |
|---|---|---|---|---|---|---|
| 1 Bedroom | 46.7% | 143 | 762 | 93.7% | $1,612 | $2.12 |
| 2 Bedroom | 50.7% | 155 | 1,084 | 98.1% | $2,095 | $1.93 |
| 3 Bedroom | 2.6% | 8 | 1,463 | 100.0% | $2,838 | $1.94 |
| Total / Avg | 100% | 306 | 943 | 96.1% | $1,889 | $2.00 |
Also on-site: Origin Hotel (120 keys) • SpringHill Suites • 64,000 SF Class A Office • The Green gathering space
Source: U.S. Census Bureau, ACS 2024 1-Year Estimates, Table B19049 (Median Household Income by Age of Householder). Lexington's under-25 cohort is depressed by the University of Kentucky student population (33,000+ enrolled). The Henry's resident profile — median age <36, $91.8K median HH income — targets the 25–44 cohort whose income trajectory rises 125% from the under-25 baseline (vs. 97% nationally), making this the highest-velocity income demographic in the Lexington market.
Source: Moody’s Analytics (2024); property rent roll
Source: Property rent roll, resident demographic survey
78% of residents with known incomes earn above $75,000. Low rent-to-income ratios support pricing power and minimal credit risk.
The Henry’s rent premiumis not a function of newer finishes or superior amenities but of structural integration into The Summit at Fritz Farm. The difference is entirely driven by three advantages that no competitor can replicate:
1. Structural irreplaceability. The Henry is the only residential asset physically embedded within The Summit at Fritz Farm. No remaining parcels within the center can accommodate additional multifamily density. The integration—residents walk to Whole Foods, Apple, Shake Shack, Sephora, and 60+ tenants without crossing a public road—cannot be replicated at any price.
2. Proven pricing power through competition. The Henry commands a $305/mo rent premium over Greyson on 27 (2020-built, 312 units, 2.1 mi)—the nearest comparable Class A community—per CoStar. Occupancy has held at 96–97%, 200–480 bps above the submarket, through the same period.
3. Supply vacuum. Lexington's Urban Services Boundary (USB) permanently prohibits the extension of public sewer and water infrastructure beyond the established urban envelope, functionally capping new multifamily supply to sites within the existing footprint. Fayette County voters recently rejected a proposal to expand the boundary, reinforcing its permanence. Residential permitting has declined 36% since 2016, constraining for-sale alternatives and reinforcing rental demand along the Nicholasville Road corridor.
Y-axis begins at $1,000 to show differentiation across the $1,400-$2,200 range. Growth % shown above rents. 2023 growth N/A (no 2022 baseline). Source: CoStar; property financials. Rent-to-Income (RTI) Ceiling reflects the maximum monthly rent at 30% of median resident income ($91,760) — the HUD-defined affordability threshold before a household is considered cost-burdened (Brooke Amendment, 1981). Cost to Own reflects Lexington median SFH ($315K), 20% down, 6.5% 30-yr fixed mortgage, $3K/yr taxes, $1.8K/yr insurance.
Source: CoStar; property financials. The Henry has maintained 96–99% physical occupancy across 2023–2025 versus 93–94% for SE Lexington Class A submarket, a structurally tight spread reflecting concession-free leasing, low resident turnover, and limited competing supply within a 6-mile radius.
The Henry's NOI grew from $4.25M (2023) to $4.86M (2025), a 6.9% compound annual growth rate. Revenue gains were driven by consistent 5.6–7.1% annual rent increases on a property operating at 97%+ occupancy. Expense growth remained disciplined at 2.3–2.8% annually, producing steady margin expansion and a widening spread between top-line and cost growth.
Source: Property financials.
The Henry represents a rare opportunity to acquire the dominant Class A asset in Lexington's strongest submarket at a 5.81% in-place cap rate, expanding to 6.02% in Year 1. The business plan is execution-focused: preserve and extend the property's pricing power (historically 97%+ occupancy; underwritten at 95%) in a supply-constrained market where residential permitting is at a 9-year low. Demand is anchored by a deep pipeline of young professional renters from the University of Kentucky's healthcare, education, and professional services workforce. Operations will be led by NTS Capital — a fully integrated Louisville-based operator managing 6,000+ multifamily units across the Southeast and Midwest, ranked 8th nationally in J. Turner Research's ORA Power Rankings with four communities earning Elite 1% recognition. Year 1 operating projections were developed in collaboration with NTS as incoming property manager. Forward growth is conservatively underwritten at 3.5% rent growth and 3.0% expense growth — well below the 6.9% NOI CAGR achieved over the 2023–2025 period. The underwriting produces a 15.6% gross levered IRR and 1.98x equity multiple over a 5-year hold, generating $21.3M of total profit on $21.7M of equity.
| Sources | % | Per Unit | Total |
|---|---|---|---|
| Senior Loan | 72.5% | $187,484 | $57,370,000 |
| Equity | 27.5% | $71,061 | $21,744,575 |
| Total | 100% | $258,544 | $79,114,575 |
| Uses | % | Per Unit | Total |
|---|---|---|---|
| Purchase Price | 96.7% | $250,000 | $76,500,000 |
| Closing Costs | 0.7% | $1,875 | $573,750 |
| Capex Reserves | 0.9% | $2,451 | $750,000 |
| Financing Costs | 1.6% | $4,218 | $1,290,825 |
| Total | 100% | $258,544 | $79,114,575 |
The table below bridges trailing adjusted financials to Year 1 projections. All Year 1 projections were developed in cooperation with NTS Capital and reflect their operating plan as incoming property manager.
| Line Item | T3/T12 Adjusted | Year 1 Pro Forma | DELTA | Notes | |||
|---|---|---|---|---|---|---|---|
| Per Unit | Total | Per Unit | Total | $ | % | ||
| Revenue | |||||||
| Potential Market Rent | $22,438 | $6,865,941 | $23,499 | $7,190,799 | +$324,858 | +4.7% | 3.5% rent growth applied to T3/T12 base |
| Structural Vacancy | ($619) | ($189,338) | ($1,175) | ($359,540) | ($170,202) | −89.9% | Normalized to 5.0% from T3 actuals of 2.76% |
| Concessions | ($25) | ($7,580) | ($26) | ($7,940) | ($360) | −4.7% | Held at historical levels |
| Non-Revenue Units | ($304) | ($92,876) | ($77) | ($23,499) | +$69,377 | +74.7% | Reduced per NTS operations plan |
| Collection Loss / Bad Debt | ($107) | ($32,881) | ($111) | ($33,999) | ($1,118) | −3.4% | Held at 0.50% of potential rent |
| Total Rental Income | $21,383 | $6,543,265 | $22,111 | $6,765,821 | +$222,556 | +3.4% | |
| Other Income | $2,282 | $698,403 | $2,693 | $824,115 | +$125,712 | +18.0% | Increase driven by bulk wifi implementation |
| Effective Gross Revenue | $23,666 | $7,241,668 | $24,804 | $7,589,937 | +$348,269 | +4.8% | |
| Operating Expenses | |||||||
| Personnel | $1,395 | $426,833 | $1,631 | $499,105 | +$72,272 | +16.9% | NTS full-service staffing plan |
| Administrative | $288 | $88,277 | $297 | $90,925 | +$2,648 | +3.0% | 3.0% growth from T12 base |
| Marketing / Advertising | $200 | $61,165 | $441 | $135,000 | +$73,835 | +120.7% | NTS enhanced digital + resident program |
| Contract Services | $343 | $104,906 | $353 | $108,053 | +$3,147 | +3.0% | 3.0% growth from T12 base |
| R&M | $343 | $104,862 | $353 | $108,008 | +$3,146 | +3.0% | 3.0% growth from T12 base |
| Turnover | $349 | $106,697 | $359 | $109,898 | +$3,201 | +3.0% | 3.0% growth from T12 base |
| Total Controllable | $2,917 | $892,740 | $3,435 | $1,050,989 | +$158,249 | +17.7% | |
| Utilities | $981 | $300,056 | $1,010 | $309,057 | +$9,001 | +3.0% | 3.0% growth from T12 base |
| Real Estate Taxes | $3,096 | $947,471 | $3,096 | $947,471 | $0 | 0.0% | T3/T12 adjusted to match Y1 post-reassessment |
| Insurance | $625 | $191,250 | $625 | $191,250 | $0 | 0.0% | T3/T12 adjusted to match Y1 per Lockton quote |
| Property Management Fee | $710 | $217,250 | $744 | $227,698 | +$10,448 | +4.8% | T3/T12 adjusted to 3.0% of revenue to match Y1 |
| HOA | $517 | $158,059 | $532 | $162,800 | +$4,741 | +3.0% | 3.0% growth from T12 base |
| Total Non-Controllable | $5,928 | $1,814,086 | $6,007 | $1,838,276 | +$24,190 | +1.3% | |
| Replacement Reserves | $300 | $91,800 | $300 | $91,800 | $0 | 0.0% | T3/T12 adjusted to match Y1 at $300/unit |
| Total Operating Expenses | $9,146 | $2,798,626 | $9,742 | $2,981,065 | +$182,439 | +6.5% | |
| Net Operating Income | $14,520 | $4,443,042 | $15,062 | $4,608,872 | +$165,830 | +3.7% | |
| Cap Rate | 5.81% | 6.02% | +21 bps | ||||
| Line Item | Y0 | Y1 | Y2 | Y3 | Y4 | Y5 | Total |
|---|---|---|---|---|---|---|---|
| Assumptions | |||||||
| Effective Rent / Unit / Mo | $1,958 | $2,027 | $2,098 | $2,171 | $2,247 | ||
| Occupancy | 95.0% | 95.0% | 95.0% | 95.0% | 95.0% | ||
| Rent Growth | — | 3.5% | 3.5% | 3.5% | 3.5% | ||
| Other Income Growth | — | 3.0% | 3.0% | 3.0% | 3.0% | ||
| Operating Expense Growth | — | 3.0% | 3.0% | 3.0% | 3.0% | ||
| Revenue | |||||||
| Potential Market Rent | $7,190,799 | $7,442,477 | $7,702,964 | $7,972,567 | $8,251,607 | ||
| Structural Vacancy | ($359,540) | ($372,124) | ($385,148) | ($398,628) | ($412,580) | ||
| Concessions | ($7,940) | ($8,218) | ($8,506) | ($8,803) | ($9,111) | ||
| Non-Revenue Units | ($23,499) | ($24,321) | ($25,173) | ($26,054) | ($26,966) | ||
| Collection Loss / Bad Debt | ($33,999) | ($35,189) | ($36,421) | ($37,695) | ($39,015) | ||
| Total Rental Income | $6,765,821 | $7,002,625 | $7,247,716 | $7,501,387 | $7,763,935 | ||
| Other Income | $824,115 | $848,838 | $874,304 | $900,533 | $927,549 | ||
| Effective Gross Revenue | $7,589,936 | $7,851,463 | $8,122,020 | $8,401,920 | $8,691,484 | ||
| Operating Expenses | |||||||
| Personnel | $499,105 | $514,078 | $529,500 | $545,386 | $561,747 | ||
| Administrative | $90,925 | $93,653 | $96,462 | $99,356 | $102,337 | ||
| Marketing / Advertising | $135,000 | $139,050 | $143,222 | $147,518 | $151,944 | ||
| Contract Services | $108,053 | $111,295 | $114,633 | $118,072 | $121,615 | ||
| R&M | $108,008 | $111,248 | $114,586 | $118,023 | $121,564 | ||
| Turnover | $109,898 | $113,195 | $116,591 | $120,089 | $123,691 | ||
| Utilities | $309,057 | $318,329 | $327,879 | $337,715 | $347,846 | ||
| Real Estate Taxes | $947,471 | $947,471 | $947,471 | $947,471 | $947,471 | ||
| Insurance | $191,250 | $196,988 | $202,897 | $208,984 | $215,254 | ||
| Management Fee (3.0% of EGR) | $227,698 | $235,544 | $243,661 | $252,058 | $260,745 | ||
| HOA | $162,800 | $167,684 | $172,715 | $177,896 | $183,233 | ||
| Replacement Reserves | $91,800 | $91,800 | $91,800 | $91,800 | $91,800 | ||
| Total Operating Expenses | $2,981,066 | $3,066,234 | $3,153,993 | $3,244,422 | $3,346,016 | ||
| Net Operating Income | $4,608,870 | $4,785,229 | $4,968,027 | $5,157,498 | $5,345,468 | ||
| Cap Rate | 6.02% | 6.26% | 6.49% | 6.74% | 6.99% | ||
| Unlevered Cash Flows | |||||||
| Purchase Price | ($76,500,000) | ($76,500,000) | |||||
| Closing Costs (0.75% of PP) | ($573,750) | ($573,750) | |||||
| Capex Reserves | ($750,000) | ($750,000) | |||||
| Net Operating Income | $4,608,870 | $4,785,229 | $4,968,027 | $5,157,498 | $5,345,468 | $24,865,092 | |
| Recurring Capex | ($168,300) | ($176,103) | ($184,140) | ($192,418) | ($200,945) | ($921,906) | |
| Sale Price | $95,118,751 | $95,118,751 | |||||
| Selling Costs (1.25% of Sale) | ($1,188,984) | ($1,188,984) | |||||
| Unlevered Cash Flow | ($77,823,750) | $4,440,570 | $4,609,126 | $4,783,887 | $4,965,080 | $99,074,290 | $40,049,203 |
| Unlevered IRR | 9.53% | ||||||
| Unlevered MOIC | 1.52x | ||||||
| Levered Cash Flows | |||||||
| Purchase Price | ($76,500,000) | ($76,500,000) | |||||
| Loan Amount | $57,370,000 | $57,370,000 | |||||
| Closing Costs (0.75% of PP) | ($573,750) | ($573,750) | |||||
| Capex Reserves | ($750,000) | ($750,000) | |||||
| Financing Costs | ($1,290,825) | ($1,290,825) | |||||
| Net Operating Income | $4,608,870 | $4,785,229 | $4,968,027 | $5,157,498 | $5,345,468 | $24,865,092 | |
| Interest Expense | ($3,019,096) | ($3,019,096) | ($3,019,096) | ($3,019,096) | ($2,977,497) | ($15,053,881) | |
| Principal Amortization | — | — | — | ($787,826) | ($829,426) | ($1,617,252) | |
| Recurring Capex | ($168,300) | ($176,103) | ($184,140) | ($192,418) | ($200,945) | ($921,906) | |
| Asset Management Fee | ($137,950) | ($142,257) | ($146,700) | ($151,283) | ($156,008) | ($734,198) | |
| Sale Price | $95,118,751 | $95,118,751 | |||||
| Selling Costs (1.25% of Sale) | ($1,188,984) | ($1,188,984) | |||||
| Loan Payoff | ($55,712,267) | ($55,712,267) | |||||
| Levered Cash Flow to Equity | ($21,744,575) | $1,283,524 | $1,447,773 | $1,618,091 | $1,006,874 | $39,399,092 | $23,010,779 |
| Cash-on-Cash Return | 5.9% | 6.7% | 7.4% | 4.6% | 5.4% | ||
| DSCR | 1.53x | 1.58x | 1.65x | 1.35x | 1.40x | ||
| Levered IRR | 15.63% | ||||||
| Levered MOIC | 1.98x | ||||||
Revenue grows at 3.5% annually; Other Income at 3.0%; Operating Expenses at 3.0% (Real Estate Taxes held flat post-reassessment; Management Fee held at 3.0% of EGR; Replacement Reserves flat at $300/unit). Y0 reflects acquisition and financing flows. Levered CF reflects 3-year interest-only period at 5.26% on $57.37M senior loan, stepping to 30-year amortization in Year 4. Capex Reserve includes HVAC replacements and water heaters. Management Fee reflects NTS contracted rate. Final model detail pending v9 extraction.
Levered IRR / Equity Multiple at varying rent growth and exit cap rate assumptions.
| Rent Growth | ||||||
|---|---|---|---|---|---|---|
| 2.00% | 2.50% | 3.50% | 3.75% | 4.00% | ||
Exit Cap Rate |
5.00% | 17.5% / 2.0x | 19.5% / 2.1x | 21.5% / 2.3x | 22.5% / 2.4x | 23.5% / 2.5x |
| 5.25% | 15.5% / 1.9x | 17.5% / 2.0x | 19.5% / 2.2x | 20.5% / 2.3x | 21.5% / 2.3x | |
| 5.50% | 13.5% / 1.8x | 15.5% / 1.9x | 17.5% / 2.1x | 18.5% / 2.2x | 19.5% / 2.2x | |
| 5.75% | 11.5% / 1.7x | 13.5% / 1.8x | 15.6% / 2.0x | 16.5% / 2.0x | 17.5% / 2.1x | |
| 6.00% | 9.5% / 1.6x | 11.5% / 1.7x | 13.5% / 1.8x | 14.5% / 1.9x | 15.5% / 2.0x | |
Levered IRR / Equity Multiple at varying rent growth and purchase price. Exit cap held at 5.75%.
| Rent Growth | ||||||
|---|---|---|---|---|---|---|
| 2.00% | 2.50% | 3.50% | 3.75% | 4.00% | ||
Purchase Price |
$72.5M $237K/unit | 13.5% / 1.8x | 15.5% / 2.0x | 17.5% / 2.1x | 18.5% / 2.2x | 19.5% / 2.2x |
| $74.5M $243K/unit | 12.5% / 1.8x | 14.5% / 1.9x | 16.5% / 2.0x | 17.5% / 2.1x | 18.5% / 2.2x | |
| $76.5M $250K/unit | 11.5% / 1.7x | 13.5% / 1.8x | 15.6% / 2.0x | 16.5% / 2.0x | 17.5% / 2.1x | |
| $78.5M $257K/unit | 10.5% / 1.6x | 12.5% / 1.7x | 14.5% / 1.9x | 15.5% / 1.9x | 16.5% / 2.0x | |
| $80.5M $263K/unit | 9.5% / 1.5x | 11.5% / 1.7x | 13.5% / 1.8x | 14.5% / 1.8x | 15.5% / 1.9x | |