Bluerock, Carroll Tag Team On Big Perimeter Center Grab
ATLANTA—Bluerock Residential Growth REIT acquired Nevadan Apartments, a 480-unit multifamily complex in Atlanta. Bluerock acquired the multifamily asset through a joint venture. The purchase price: $68.25 million, or about $142,188 per multifamily unit.
Bluerock invested 90%—ore about $23 million of the joint venture’s equity requirement. An affiliate of the Carroll Organization invested the balance for a 10% stake in the venture. The JV helped capitalize the off-market transaction with a $48 million senior loan.
“We see significant upside potential for this property and believe it to be a strong addition to the portfolio,” says Ramin Kamfar, chairman and CEO of Bluerock. “The property has good, intrinsic value, while the Perimeter Center submarket and the larger Atlanta MSA show much promise for the coming years. Our ability to source this property at a favorable cost basis makes it possible for us to bring a strong product to market at competitive rents.”
The multifamily acquisition is projected to yield a stabilized pro forma cap rate of about 6.5% on execution of the company’s value-add upgrade strategy. That compares favorably to estimated market cap rates of 4.75% to 5.25% for comparable multifamily assets.
Built in 1990, Nevadan features one-, two- and three-bedroom units averaging nearly 1,100 square feet. The multifamily community sits within Perimeter Center, one of Atlanta’s fastest growing employment submarkets. The asset is close to both Interstate 285 and GA-400, which provide access to employment nodes throughout the city.
What’s more, three major hospitals, known collectively as ”Pill Hill,” are five to seven minutes’ driving distance from the multifamily property and provide about 15,000 jobs. An added 9,000 jobs are being created within three miles of the property as State Farm and Mercedes-Benz establish new headquarters in Perimeter Center.
With other developers and investors targeting this submarket—and Greater Atlanta and the Southeast in general—should we be concerned about overbuilding rearing its head? Charlie Williams, senior vice president and southeast regional manager of multifamily production at KeyBank Real Estate Capital, tells GlobeSt.com his group remains cautiously concerned of overbuilding.
“There could be a potential supply and demand issue in specific pockets of the region,” Williams says. “However, as the Southeast remains a hub for retiring Baby Boomers from the Northeast and Midwest, there is currently a strong tenant demand driving the multifamily sector. There is also an influx of international interest coming into the region. We are seeing more people from South America and Europe moving into the Southeast, causing a need for continuous development in these areas.”
SOURCE: GLOBEST.COM
