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Blue Heron Buys Historic Boylan Apts. in Raleigh for $6.3M

23 Apr 2015, 8:28 pm

by Adriana Pop, Associate Editor

In a $6.3 million deal, an affiliate of Blue Heron Asset Management LLC acquired the historic Boylan Apartments at the corner of Hillsborough Street and Boylan Avenue near downtown Raleigh.

The seller of the 55-unit boutique multifamily community at 817 Hillsborough St. was Historic Boylan Apartments LLC. According to the Triangle Business Journal, the entity, which is led by Raleigh lawyer Ronald Dorrestein, purchased the property in 2011 from the Joyner Realty Co. for an undisclosed amount.

Located on a 1.3-acre site in the flourishing Glenwood South neighborhood, the community comprises three low-rise brick colonial revival-style buildings. It was constructed in 1935 and renovated in 1970 and 2007. Amenities include a landscaped courtyard, outdoor grilling station, on-site laundry and bicycle racks.

The sale was brokered by Allan Lynch and Justin Good of Cushman & Wakefield/Thalhimer’s capital markets group in Raleigh.

Blue Heron now plans to refurbish the units with modern interior upgrades.

The company’s other properties/projects in the Triangle include Marquee Station, a mixed-use 265-unit apartment community in Fuquay Varina; Timber Hollow, a 198-unit multifamily community in Chapel Hill; Mason at Apex, a 92-acre parcel in Apex slated for mixed-use residential development; the 398-unit UNC-Chapel Hill student family housing development; and a 322-unit, garden-style apartment community in Durham.

Photo credits: Cushman & Wakefield/Thalhimer

Duke Realty Completes $1.1B Sale of Office Portfolio in Triangle, Three Other Markets

10 Apr 2015, 8:07 pm

by Adriana Pop, Associate Editor

Duke Realty Corp. has closed on the previously announced $1.12 billion disposition of its entire office portfolio in the Triangle and three other markets, including Nashville, St. Louis and South Florida.

In an off-market transaction, a joint venture between Starwood Global Opportunity Fund X, Vanderbilt Partners and Trinity Capital Advisors has acquired 62 of the company’s wholly-owned suburban office properties, which offer a total of 6.9 million square feet and 57 acres of undeveloped land.

The portfolio, which had an average occupancy rate of 90 percent at the time of sale, included 24 buildings in Morrisville, Raleigh and Cary; 15 buildings in St. Louis; 14 buildings in Nashville, Tenn.; as well as nine buildings in South Florida. The undeveloped land is located at Perimeter Park in Morrisville and in South Florida.

The transaction is in line with Duke Realty’s long-term strategy to focus on industrial and medical office assets, while exiting many of its suburban office markets. According to the Triangle Business Journal, the company will continue to manage the 3 million square feet of industrial buildings and medical office buildings it owns in the Triangle area.

“We believe that we are at an attractive point in the cycle to enter suburban office markets that are well-positioned for growth, and we will continue to seek out investments in the sector on an opportunistic basis,” Christopher Graham, senior managing director and head of Real Estate Acquisitions for the Americas at Starwood Capital Group, said in a news release.

Since it was founded in 1991, Starwood Capital Group has acquired more than 60 million square feet of office properties around the world, and currently manages approximately 35 million square feet.

Photo credits: www.loopnet.com

PRG Buys 396-Unit Raleigh Apartment Complex, Plans Major Upgrades

3 Apr 2015, 10:03 pm

by Adriana Pop, Associate Editor

PRG Real Estate has acquired The Falls Apartment Homes, a 396-unit garden-style multifamily community in northwest Raleigh, N.C.

The property’s location, only a few miles north of North Carolina State University, which is home to 35,000 students and 8,000 full time employees, and just a 15 minute commute to Research Triangle Park, downtown Raleigh, and the RDU Airport, makes it attractive to both students and post-grads. It dates back to 1987, when it opened as a singles community called The Players Club.

PRG is now planning to invest $5.8 million (or $14,000 per unit) into the community’s interior and exterior renovation, which marks the largest rehab project in the company’s history.

Plans call for a redesign of the enormous, outdated clubhouse with a modern lounge area, media room, billiard area and 1,500-square-foot fitness center. Also, the dated euro-style cabinets and laminate counters will be replaced by stainless steel appliances, faux granite counters and new espresso colored cabinets. Exterior improvements include re-siding the buildings with Hardi-board, a new dog park, resurfacing the pool deck, as well as new property signage.

“This is our thirteenth acquisition in the Raleigh market and we continue to experience much success. Our rehab plans are tailored to provide a better quality of life for our residents, and I’m particularly excited about the interior renovations and added amenities for The Falls,” said PRG CEO Sam Foster.

Last year, the company also acquired the Clarion Crossing Apartments in southwest Raleigh. The 260-unit, garden-style community is currently undergoing a $1.3 million capital improvement program that will run until 2016.

Photo credits: www.thefalls-prg.com

Q&A with Daniel Eller, President & CEO of Eller Capital Partners

27 Mar 2015, 11:27 pm

by Adriana Pop, Associate Editor

Eller Capital Partners is a multifamily investment, development and property management company based in Chapel Hill. The company, founded in 2011, is committed to offering apartment units with modern, upscale finishes at an accessible price. This spring, Eller Capital has also launched an incentive program for public employees.

Daniel Eller, President & CEO of Eller Capital Partners

Q: Could you tell us more about your company’s new housing incentive program for public employees?

Eller Capital Partners recently announced a new housing incentive program for Town of Chapel Hill, Town of Carrboro, Orange County and State of North Carolina public employees, including individuals who work for the University of North Carolina. Eller is offering generous discounts on rent and is waiving certain fees for public employees who sign 12-month leases at our newly-renovated apartment communities, 86 North Apartment Homes and The Apartments at Midtown 501. Lessees can expect to save between $2,000 and $3,050 on rent in the first year.

Eller’s program has the support of the Superintendent of Chapel Hill-Carrboro City Schools, the Chapel Hill Police Chief, the Chapel Hill-Carrboro Chamber of Commerce, Chapel Hill Mayor Mark Kleinschmidt and Carrboro Mayor Lydia Lavelle.

Until now, most people who have great jobs serving the Chapel Hill community and the University have been forced to choose between two extremes: newer, luxury apartments that cost too much and older, more affordable apartments that lack the modern finishes and amenities that renters today expect and desire. Eller’s decision to redevelop existing properties, instead of tearing them down and rebuilding from the ground up, has provided Chapel Hill and Carrboro residents with the modern apartments that they demand but haven’t previously had access to in Chapel Hill.

Q: What’s your forecast for the Chapel Hill market and what kind of long-term results do you expect?

Eller believes that Chapel Hill is a market that continues to have an enormous demand for quality housing, despite a limited amount of quality supply. Currently, just 6 percent of the conventional multifamily housing market in the Chapel Hill-Carrboro School District is less than 10 years old. More than 80 percent is more than 25 years old, and over 55 percent is more than 35 years old. The 6 percent of the conventional multifamily housing market that has been delivered in the last 10 years includes four assets totaling just 430 units. The entire conventional Chapel Hill apartment market (within the school district) totals just over 7,000 multifamily units. Only 22 percent of the people who work in Chapel Hill also live in Chapel Hill.

Eller Capital feels strongly that both the top and the middle of the market are currently underserved. Chapel Hill experienced a development boom in the 1970s and a smaller one in the mid-1980s. Very little multifamily product was built in Chapel Hill in the 1990s and 2000s. With only 430 multifamily units built in the last decade, this has created a market situation in which many of the people who work in Chapel Hill and have great jobs are not able to find the quality of housing that meets their demands.

Eller believes there is significantly more demand at the very top of the market than just 430 units, and we believe that the market strongly supports the current pipeline of new supply. There are a few development projects currently underway and several others that have been proposed. Barriers to entry in Chapel Hill, including the scarcity and high cost of land and a very lengthy and expensive entitlement process, have discouraged many developers from proposing new projects.

Eller Capital Partners, recognizing the imbalance of the multifamily market in Chapel Hill, began to pursue major renovations of older multifamily assets with the goal of offering a product that has new, luxury finishes at a price in the middle of the older, less desirable assets and those assets that are desirable and have been built within the last 10 years (but may be more expensive than what most people who work in Chapel Hill are willing to pay).

Q: Is there any particular product you are focused on? What types of demographics do you target?

Eller Capital Partners is focused exclusively on multifamily housing. We prefer assets that are well-located in their respective markets and submarkets, are in high-traffic locations with close proximity to major employment centers and are either walkable or in very close proximity to high-quality retail. We really focus on acquiring assets that are close to Walgreens, Starbucks, Whole Foods or other similar retailers – all who spend much more time and money than we would be able to on demographic research and analysis.

In Chapel Hill, Eller Capital has focused on major renovations of older but extremely well-located communities. We have combined major exterior architectural changes with luxury interior finishes including granite countertops, plank flooring, stainless steel appliances and all new plumbing and electrical fixtures to create brand new apartment communities out of older, existing ones. Simultaneously, we have made major improvements to the energy efficiency of the apartment units and created state-of-the-art amenity centers that are unrivaled in the local market. Eller is also developing a 109-unit addition to one of its Chapel Hill assets and is pursuing other new development opportunities.

Outside of Chapel Hill, Eller Capital is focused on the acquisition of newer assets with modern architecture that are in great locations and offer the ability to make improvements to amenities and interior finishes, ultimately with the objective of decreasing the effective age of the asset and making it more competitive in its marketplace.

4. What are your priorities and what challenges do you foresee?

Our priorities over the next year are to continue to work towards the execution of our existing renovation and new development projects, to continue to find creative ways to solve problems and take advantage of market opportunities, and to continue to expand the company in an aggressive but deliberate manner over the next 18-24 months.

Some of the larger challenges we anticipate include continuing to battle fierce competition from other multifamily investors for acquisitions, the likelihood that interest rates will start to increase and the impact that the delivery and absorption of newly-constructed apartment communities will have in some of our markets.

5. Are you optimistic about finding lenders to finance multi-family acquisitions in this region?

There is currently a tremendous amount of both debt and equity capital that is aggressively pursuing multifamily lending and investing opportunities in this region. Eller is very optimistic about finding lenders to finance multifamily acquisitions in 2015. However, we are also cautious and aware of the fact that 18-24 months from now the capital markets may look very different.

6. Do you have plans to expand to other parts of the country?

Eller Capital Partners owns or has owned assets in North Carolina, South Carolina and Tennessee. We are currently pursuing opportunities throughout the Southeast and beyond. Eller is targeting more than $500,000,000 in multifamily acquisitions during the next 18-24 months and expects to acquire assets both within and outside of its existing footprint.

For more information on Eller’s apartment communities, please visit www.LivingChapelHill.com.

Armada Hoffler Sells Newly Built Multifamily Property in Durham for $35.6M

27 Mar 2015, 11:16 pm

by Adriana Pop, Associate Editor

Armada Hoffler Properties is selling the Whetstone Apartments community in Durham for $35.6 million to an undisclosed buyer.

The 203-unit apartment complex at 501 Willard St. is situated in the city’s downtown area near Duke University. The company delivered the property’s first units in the third quarter of 2014.

The community offers a mix of studio, one- and two- bedroom apartments with monthly rents ranging from $1,040 to $1,600. Amenities include a resort-style swimming pool, a garden courtyard with fireplace, a fitness center, an entertaining community room, elevator access to all floors, as well as covered parking and controlled access. Leasing and management duties are being provided by Grubb Properties.

According to Lou Haddad, president and CEO of Armada Hoffler, the company expects to record a profit of more than 20 percent from the disposition of the property, despite the fact that the asset is still in lease-up phase.

“We are delighted to continue our long-standing strategy of selling non-core assets from time to time and monetizing the wholesale-to-retail spread on our development projects,” Lou Haddad added. “Whetstone is our third disposition in six months and we will redeploy the capital in a way that best creates value for our shareholders.”

The transaction will be completed in the second quarter of 2015 and is subject to the satisfaction of certain closing conditions.

Photo credits: whetstoneapartments.com

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