Asheville Luxury Apartments Secure $49M Development Financing

Hominy Creek Apartments. Image courtesy of Walker & Dunlop

Southeast Partners, a recently founded South Carolina-based investment and development firm, has secured a $49.3 million in senior debt funding and preferred equity for the construction of Hominy Creek Apartments, a nine-building, 216-unit luxury community located in Candler, N.C. The financing includes a $32.3 million construction loan from two regional banks and $17 million in preferred equity provided by an institutional fund organized for the developer.

A first for the developer

Walker & Dunlop’s Capital Markets and Investment Sales divisions worked to procure the financing for the borrower. The Capital Markets team was led by Senior Director Walker Layne and Managing Directors Matt Wallach and Stephen West. Senior Director Fletcher Dunn of Investment Sales collaborated with them to arrange the preferred equity.

For Layne, part of the project’s appeal for the investors was due to the purchase of the site below market rate, as well as fundamentals around new multifamily developments in Asheville. “The investment resonated with the capital markets due to the attractive all-in cost basis, conservative rent projections relative to existing older vintage assets in the submarket, and the high barriers to entry that exist in Asheville for new multifamily development,” Layne told Multi-Housing News.

According to reporting from Citizen Times, Hominy Creek Apartments is being built at the site of a former warehouse operated by WNC Pallet Company. The Buncombe County Board of Adjustment approved the project in March. The developers agreed to build a community playground at the site, as well as soundproofing the property to shield it from blasting at a nearby quarry. Southeast Partners also committed to obtaining a No-Rise certification from the Federal Emergency Management Agency to prevent flooding, Citizen Times reported.

The project is the developer’s first in North Carolina. According to Walker & Dunlop, the community is scheduled to be completed in 2024, with full stabilization expected in mid-2025.

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At completion, Hominy Creek Apartments will sit on 17.5 acres, and will be sectioned into one-, two- and three-bedroom apartments, according to information from Yardi Matrix. Around the community, renters will have access to a disc golf course, swimming pool, gardening spaces and walking trails. Located at 40 Pallet Rd., the community will be within eight miles of downtown Asheville, and within one mile of access to many of Chandler’s educational offerings and local businesses.

Action in Asheville

According to data from Macrotrends, Asheville’s population has increased by nearly 20,000 over the past three years. The city has attracted the eye of several high-profile investment firms, including Clarion Partners. In March, the firm purchased Retreat at Weaverville, a 176-unit upscale property from Graycliff Capital. The property was purchased as part of a fund managed by Franklin Templeton, which targets investments in cities with strong demographic trends.