The fourth-quarter transaction market began with a bang.
A 64-community portfolio, composed of more than 20,400 units across the nation, was sold Thursday. The Dallas-based private equity firm, Lone Star Funds, purchased the massive portfolio in a transaction that was estimated to cost about $1.8 billion. Greensboro, N.C.-based Bell Partners and New York-based DRA Advisors were the sellers.
David Luski, President of DRA Advisors, says the strength of the portfolio exceeded his expectations.
"This portfolio has generated strong cash yields and has benefitted from our active asset management approach throughout the hold period,” he says in the news release.
The transaction included 20,439 units in nine states including 6,800 units in North Carolina, more than 5,000 in Texas and the rest in Arkansas, Delaware, Florida, Maryland, Ohio, Tennessee and Washington.
However, the large amount of units included in the North Carolina markets won’t put a dent in Bell’s presence throughout the state as the company is often assessing deals there, Jon Bell says.
“We are always looking for good investment opportunities throughout our target markets in North Carolina, primarily in Charlotte and Raleigh,” he says.
The portfolio was originally purchased as part of an 86 property joint venture deal that DRA and Bell closed in 2008. The two companies have since sold the other 22 of those properties to different buyers.
Bell, president of the firm, says the debt on the original deal was financed at seven years and was due to come up for refinancing, so the companies decided to shop around.
“We went out to a couple of brokerage firms to get opinions on values,” Bell says. “And we decided to sell all of it free and clear of existing debt.”
Bell Partners will continue to manage the properties under the new ownership and continue with a renovation plan that had been stalled during the recession.
“We did a fair amount of renovations on some of the properties, but the financial crisis ensued and we lost some pricing power,” Bell says. “I do think there’s opportunity for the next buyer to continue to upgrade the properties. We are looking forward to working with them in repositioning the assets.”
As for other big transactions, Bell says this is it for this year. The company is on pace to complete about $2.2 billion in sales and about $500 million in purchases this year, Bell says.
“We’re an aggressive seller but a cautious buyer,” he says.