In a purchase that ranks behind only two other portfolio transactions (and the Essex Property Trust-BRE Properties deal that closed in April), Greenwich, Conn.-based Atlas Apartment Holdings spent $490 million on a 20-asset portfolio located throughout Texas, Florida, Georgia, and the Carolinas.
It looks like the deal is an ambitious value-add play for Atlas, which has purchased $400 million in assets across 13 properties over the past 24 months (though they didn’t move into the Top 50 buyers nationally until today’s purchase), according to New York Based Real Capital Analytics (RCA). The portfolio, which had 1970s- and 1980s-vintage properties, represents a total of 5,059 units and is currently 96 percent occupied, “offering strong in-place cash flow,” according to Cushman & Wakefield, which acted as the exclusive adviser to Atlas Apartment Holdings.
“Each of the assets are strategically located in geographically-diverse markets with demonstrated market rent growth,” Cushman said in the release. “The portfolio also provides substantial income growth potential via a value-add renovation program.”
The approximately $490 million transaction was executed in two parts. In one part, Atlas acquired two properties, constituting 1,024 units in Orlando, for approximately $150 million. In another, it bought the interest in the remaining 18 properties assigned to a large private opportunity fund for approximately $340 million. The Atlas’ acquisition of the two properties represents the largest Orlando apartment acquisition to date, according to Cushman.
RCA reports that the average price per unit in 2014 for those states is $86,707 and the price in Orlando is $84,829.
“This portfolio gave institutional equity the ability to deploy a large amount of capital into strong, economically-diverse markets across the Southeast and Southwest United States. Continued liquidity in the multifamily sector coupled with strong fundamentals fueled investor interest,” said John Alascio, managing director of Cushman & Wakefield’s Equity, Debt & Structured Finance group in the release.
Only three deals rank higher on this year's acquisition rankings: the Essex-BRE deal in April; the purchase by Dallas-based Lone Star Funds of 20,400 units from Greensboro, N.C.-based Bell Partners and New York-based DRA Advisors for $1.8 billion; and Boston-based Berkshire Property Advisors purchase of 4,400 units from New York based Broad Street Development and Dallas-based Crow Holdings Capital Partners for a reported contract price of $610 million.
With a couple of other major portfolios on the market this probably won’t be the last big deal of 2015.
"There is so much institutional capital that needs to be invested that these large players have to focus on the biggest deals, which favors portfolios in the apartment sector,’ says Ben Thypin, director of market analysis at RCA. “So when a good quality, large portfolio like this comes to market, there is a tremendous amount of interest from the institutional investment community.”