30.54% 

 

8.56%               

 

19                     

 

$65,000         

 

$120,000   

 

$1,200,000     

 

$800,000   

 

 

Distributions on invested capital


Annual return, paid as dividend last three quarters

 

Homes purchased

 

Average purchase price per home

 

Average insured replacement cost per home

 

Total purchase price with $400,000 seller financing

 

In equity at time of purchase

 

SpringView Investments Fund I, closed to new investors in July 2012, purchased 19 homes in Memphis, TN, and earned a 30.54% return on invested capital for investors. A transaction summary:

MEMPHIS AREA ECONOMIC OVERVIEW 

SpringView Investments I 

Memphis is a fast-growing city located in the middle of the Sun Belt. Located on the Mississippi River in the southwest corner of Tennessee,

 

Memphis lies at the geographic crossroads between the Mid-South and the Mid-West and is within 500 miles of two-thirds of the nation’s population. Memphis is the largest city in Tennessee and the western focal point of the state.  Adjacent to the Mississippi River and intersected by seven federal and three interstate highways, the city’s central location is key to the local economy’s success.

 

Superior logistics and intermodal transportation capabilities position Memphis as America’s Distribution Center.  This position is further enhanced by the presence of the FedEx World Headquarters.

 

POPULATION AND JOBS

 

The Memphis MSA is the 41st largest city in the United States, and has experienced a significant increase in population since 2000.  According to the US Census, the 2010 population of 1.31 million represents a 9.2% increase over the last decade.  Memphis area unemployment nearly doubled from 5.3% to 10.0% between 2007 and 2010.  As of January 2012 the unemployment rate dropped to 9.2%, and many employers have announced relocation or expansion plans within the MSA.

 

LOCAL ECONOMY

 

Downtown Memphis is the region’s economic center with more than 80,000 employees working in the urban center and is anchored by several large corporate headquarters along with government, medical and financial institutions.  Downtown is undergoing a renaissance with more than $2.5 billion in development projects recently completed, currently planned or underway.

 

The Memphis economy has benefited from several years of rapid growth and increasing diversification. During 2010, major job announcements included: Electrolux (1,250+ jobs), Methodist Healthcare (535 jobs), Twin Creek Technologies (512 jobs), McKesson Corp. (500 jobs), Wilh. Schultz GMBH (500 jobs), Soladigm (300 jobs), Awesome Products (200 jobs), Sharp Manufacturing (180 jobs), Hardy Bottling (151 jobs), Technicolor (150 jobs), and Siemens (150 jobs).

 

Primary industries supporting the Memphis economy are distribution & logistics, manufacturing, agribusiness and healthcare.

 

The ease of distribution contributes significantly to the manufacturing industry in Memphis. While the rest of the nation has lost manufacturing jobs to foreign markets, the percentage of manufacturing jobs in Memphis has increased to 10% of the population. Memphis leads the nation’s top 100 cities with the highest percentage of workforce involved in logistics and is also home to eight Fortune 1,000 headquarters, and many other major corporations’ headquarters can be found in the city.

 

ECONOMIC HIGHLIGHTS

 

Memphis is known as “America’s Distribution Center” due to its unique convergence of river, highway, rail and air modes of transportation.

 

Memphis International Airport (MEM) is the only airport in North America considered to be an “aerotropolis,” an urban grouping of aviation related businesses extending 15 to 20 miles from an airport. The Memphis aerotropolis covers the majority of the Memphis MSA, including Shelby County, northern DeSoto County and eastern Crittenden County.

 

Memphis is a Leading Intermodal Logistics Center

  • #1 in percent of logistics workforce
  • #2 largest port on the Mississippi River
  • #3 in Class I railroad service in the U.S.
  • #3 trucking corridor in the U.S.
  • #4 largest inland port nationwide

 

The city is home to five Class I railroads - BNSF, CSX, Union Pacific, Norfolk Southern and Canadian National. More than two-thirds of all international freight tons move through Memphis by rail.

 

Seven major U.S. Highways run through Memphis and the city is linked coast-to-coast via Interstates 40 and 55. Soon Memphis will be linked to Canada and Mexico by Interstate 69.

 

Memphis is located at center of over 70% of America’s consumer population. More than 150 metropolitan markets can be reached overnight by truck from the city.

 

The Aerotropolis is connected to many of the city’s largest employers: FedEx, UPS, Delta Airlines, Nike, Ford Motor Company, Kellogg’s, Smith & Nephew, Medtronic, AutoZone, and International Paper.

 

Memphis International Airport (MEM)

  • Ranked the #1 busiest cargo airport in the world eighteen of the last nineteen years, MEM handles 4 billion pounds of cargo each year.
  • MEM has an economic impact of $28.6 billion annually.
  • The airport generates 220,000 jobs, one of every three in the region.
  • More than $90 million in construction improvements currently underway.
  • MEM is home to a regional hub of Delta Airlines, the largest passenger airline in the world.
  • The world runway serves flights to Amsterdam, Cancun, Toronto and Vancouver.

FedEx is Memphis’ largest employer and has an annual impact of $25 billion on the Memphis economy.

 

FedEx, the world’s premier global provider of express transportation, is headquartered in Memphis. FedEx is also the city’s largest employer with more than 30,000 employees. The world headquarters is located in southeast Memphis. The campus is spread out over 89 acres and provides 1.1 million square feet of office space. The campus’ eight buildings house 3,300 employees. FedEx also has large campuses at the airport and in Collierville. FedEx handles 95% of the cargo coming through Memphis International Airport, or more than 3.8 billion pounds per year.

FedEx was founded in 1971 and has become an economic giant as a worldwide brand name and the second largest private employer in Tennessee. Its impact on the economy of Memphis and surrounding counties cannot be overemphasized. FedEx’s facilities at the Memphis International Airport serve as its central distribution point and have made it the busiest cargo airport in the nation.

 

TOURISM

Tourism is a major industry for Memphis.

 

Memphis is “the home of the Blues and the Birthplace of Rock ’n’ Roll.” There is more live music in Memphis than in many communities twice the size.

 

Among the city’s many music-related attractions are: Elvis Presley’s Graceland home, Beale Street, the Stax Museum of American Soul Music, the Gibson Guitar Factory, Sun Studio, The Center for Southern Folklore and The Smithsonian’s Rock and Soul Museum.

 

Memphis is home to two major sports teams, the Grizzlies of the NBA and the Redbirds, Memphis’ AAA St. Louis Cardinals farm team. It is also home to Conference USA’s University of Memphis Tigers basketball and football teams and the Mississippi Riverkings hockey team. The FedEx Forum, a $250-million multi-purpose arena that is home to the Grizzlies, is located a half block from historic Beale Street and is the new home to the Smithsonian’s Rock ‘n’ Soul Museum. AutoZone Park, home to the Memphis Redbirds, spans more than two full city blocks in downtown Memphis, across the street from the historic Peabody Hotel. The park has been named the number one minor league baseball park in the country by Baseball America and includes the largest LED video board in the minor leagues. Set on 76 acres of Overton Park,

 

More than 10 million people a year visit over 50 tourist attractions. The tourism industry in Memphis generates $3.1 billion in visitor expenditures each year and produces 52,000 jobs in tourism and hospitality generating $2.0 billion in local payroll.

 

The Memphis Zoo is home to more than 3,500 animals representing over 500 different species.  Approximately one million visitors enjoy this first class zoo each year. Memphis’ cultural attractions also include the Pink Palace Museum, the National Civil Rights Museum, Memphis Brooks Museum of Art, Dixon Gallery & Gardens, the Memphis Children’s Museum and the Memphis Botanic Gardens. There are also several professional and amateur theater companies, a symphony, an opera and two ballet companies.

 

More than 10 million people a year visit over 50 tourist attractions. The tourism industry in Memphis generates $3.1 billion in visitor expenditures each year and produces 52,000 jobs in tourism and hospitality generating $2.0 billion in local payroll.

 

HEALTH CARE

 

Growth in biomedical research is positioning Memphis as an internationally recognized leader in biosciences.

 

Memphis is a renowned health care leader. Medicine and related activities such as medical education, biomedical research and related industries in fields such as pharmaceuticals and biomedical engineering, is Memphis’ largest industry. Memphis and Shelby County contain 20 major hospitals and together they report nearly $2 billion in gross annual income. Just east of downtown Memphis sits a staggering array of medical treatment, education and research facilities, including the world-renowned St. Jude Children’s Research Hospital, LeBonheur Children’s Medical Center, The Med, VA Hospital and Methodist University Hospital. More than 30,000 people work in the 700-acre Memphis Medical Center.

 

Currently there is more than $1.4 billion in construction underway in the Memphis Medical Center, including the recent completion of the new hospital at LeBonheur Children’s Medical Center ($327 million).

 

The non-profit Memphis Bioworks Foundation was created in 2001 to promote Memphis as an international biomedical technology center. The UT-Baptist Research Park is the largest project of the Bioworks Foundation. The 1.2 million square foot planned research park will be home to a six-story world-class biotechnology research facility, five state of the art labs, office buildings, a regional biocontainment laboratory and an incubation program to develop new business in biotechnology and foster creation of jobs. The economic impact of the completed 6.5 acre UT-Baptist Research Park is projected to be $2 billion a year.

 

Economic Impact of the Completed UT-Baptist Research Park;

  • 5,000 new high-paying bioscience jobs.
  • 4,000 supporting non-bioscience jobs.
  • $250 million in annual salaries.
  • $2 billion annual economic impact.
  • $1.6 to $2.0 billion in capital investment over a 10 year period.

 

RESIDENTIAL REAL ESTATE MARKET

 

Median home prices in Memphis declined from $141,500 in December 2006 to $87,570 at year-end 2011.  This is well below the 2000 median of $118,800.  Between 2000 and the present, the Median Price / Median Income ratio has been roughly cut in half, from 3.0 to 1.5. 

 

Housing in Memphis is eminently affordable, and a return to normal affordability metrics would imply across-the-board price increases, particularly as the economy recovers bringing job and income growth.

 

April 2012 total sales increased by 15.3% over the prior year, while the Median Sales Price of $86,000 represented a 13.7% increase over the prior year.  Like many markets, Memphis has seen a precipitous decline in inventory over this time period, leading to a firming of the market.  Overall Active Listings for single family homes in Memphis declined from 8,087 to 6,671 over the prior year. 

 

The Current Month Area detail section of the MAAR Report shows the April Median Sales Price in the Shelby County Area, location of  all of the homes, increased 13.6% from  the prior year to $80,000, while the Existing Home Median increased by 11.6% over the prior year to $75,900.  Memphis’ overall housing affordability, growing population and strong economic underpinnings bode well for a stronger market in the future, and are drawing substantial investor. 

SpringView Investments Fund I earned
a 26.59% return on invested capital.

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