Fairmont Apartments - Deal Overview with Spencer Gray

Why It Matters

The Fairmont acquisition provides investors with a near‑term cash‑flow engine and upside from Midwest job growth, illustrating how disciplined, core‑plus multifamily assets can deliver strong risk‑adjusted returns in a diversifying market.

Key Takeaways

• Fairmont Apartments 219‑unit, 2025 construction, 97% occupancy achieved.
• Acquisition cap rate 5.7% versus nearby 5.0% yields 70 bps spread.
• Projected 2.2x equity multiple translates to roughly 14% IRR over seven years.
• Tax abatement provides additional cash‑on‑cash return cushion and tax efficiency.
• Gray Capital targets Midwest expansion, aiming for 2,500 units in Columbus.

Summary

The video presents Gray Capital’s investment thesis for Fairmont Apartments, a 219‑unit, Class‑A multifamily complex built in 2025 in Westerville, a Columbus suburb. Spencer Gray, CEO, outlines the property’s current performance and the firm’s broader Midwest strategy.

Fairmont is 97% occupied, surpassing national and sub‑market averages, and was acquired at a 5.7% cap rate—70 basis points above a comparable older asset at 5.0%. The sponsor projects a 2.2‑times equity multiple and roughly 14% internal rate of return over a seven‑year hold, driven largely by strong cash flow and a tax abatement that enhances cash‑on‑cash yields.

Gray Capital highlights macro drivers such as Columbus’s 9% recent job growth, a $117,000 average household income, and upcoming Intel and defense‑contractor facilities that could add thousands of high‑paying jobs. Gray notes that these factors are not fully baked into the underwriting, representing upside potential.

For investors, the deal offers a defensive, income‑focused asset in a market that is still in the early stages of a Midwest resurgence. The combination of high occupancy, favorable cap rate, and tax incentives positions Fairmont as a low‑risk, high‑return opportunity within Gray Capital’s plan to manage 2,500 units in the region.

Original Description

Fairmont Apartments is a 219-unit, Class A multifamily community in Westerville, Ohio — one of Columbus' most supply-constrained and high-demand suburbs. Built to institutional standards (2025 delivery), the property features premium finishes and a 15-year property tax abatement that significantly enhances investor returns.

Gray Capital is acquiring Fairmont at $285,000 per unit, well below estimated replacement cost of $350K+, with $43.75M in fixed-rate Fannie Mae agency debt at 5.15% with 48 months of interest-only payments. This eliminates floating-rate risk and provides predictable debt service throughout the hold period.

The investment thesis is driven by organic rent growth in a structurally supply-constrained submarket, anchored by major demand catalysts including Intel's $28B semiconductor campus (4 miles away), Anduril's defense manufacturing hub, and Ohio State University. No renovation is required — upside comes from lease-up, loss-to-lease capture, and market rent growth managed by Gray Residential, our in-house property management platform.

Target returns: 14–16% IRR, 2.2x equity multiple, 8% preferred return (cumulative, no GP catch-up), over a 7-year projected hold.

https://dealroom.graycapitalllc.com/deals/fairmont-apartments