Magma Equities Expands in North Carolina

Litchford 315 Apartments. Image courtesy of Magma Equities

Magma Equities continues building its multifamily portfolio in North Carolina with the acquisition of Litchford 315 Apartments, a newly built, 240-unit community in Raleigh, N.C., for  $83 million in an off-market deal. The transaction pushed the firm’s 2022 multifamily investment past $500 million to date.

The seller was not identified by Magma. The most recent owner was development firm DeWitt Carolinas, according to Yardi Matrix data. Located at 6320 Dowd Forest Drive, the property was completed in January. A 40-year HUD 221(d)(4)  construction loan of approximately $33.3 million was originated by Greystone Servicing Corp. in April 2020, Yardi Matrix reported. The developer acquired the14-acre site for $3.3 million, according to public records.

Magma Founder & Managing Principal Ryan Hall said in a prepared statement it is the largest single investment the firm has made in North Carolina. Hall said it is an example of Magma’s plan to diversity its portfolio with more long-term-hold core assets to complement its value-add strategy.

Litchford 315 has one-, two- and three-bedroom units spread across 10 three-story residential buildings. Apartment features include above-standard ceiling heights, washer/dryers in all units and private balconies or patios. Community amenities include a clubhouse, resort-style swimming pool, fitness center, business center, billiards and gaming lounge, a dog park and 460 parking spaces. The property was 96 percent leased at closing.

Chris Herrlinger, Magma’s director of asset management and head of the firm’s new Charlotte, N.C., office, said in prepared remarks Raleigh is one of the three fastest growing metros in the country. He said as demand reaches new heights, occupancy and rent growth will continue to climb. Herrlinger said the Magma team believes in the long-term viability of the Raleigh multifamily market and the firm is well positioned to continue building off the momentum started four years ago with a goal to create a sizeable portfolio in the region.

Growing the Portfolio

Litchford 315 is Magma’s fourth multifamily investment in North Carolina this year and the firm’s ninth overall in 2022, which nearly equals its total investment in 2021. In January, a partnership including Magma and funds managed by Franklin Templeton acquired Cameron SouthPark, a 309-unit apartment community in Charlotte in an off-market transaction for $79.3 million. It was the firm’s first multifamily purchase in Charlotte. A joint venture between Magma and Prudent Growth Partners acquired Keystone Apartments, a 202-unit multifamily community in Fayetteville, N.C., in April for $23.7 million. Also in April, Magma acquired The Hyatt Place North Raleigh-Midtown, a recently closed hotel in Raleigh, for $18 million with plans to convert the 127-key hotel into 128 studio and one-bedroom apartment units, according to the Triangle Business Journal.

Magma, a company that focuses on repositioning Class A and B apartment communities through the country, has been investing in North Carolina since 2018 and is rapidly expanding throughout the Sunbelt. The firm has also invested in Nashville, Smyrna and Knoxville in Tennessee as well as Texas. In April, Magma and funds managed by Franklin Templeton acquired Palencia Apartment Homes, a 281-unit apartment community in North Dallas. That was the firm’s fourth multifamily investment in the Dallas/Ft. Worth metro since opening a regional headquarters there last year. Magma also acquired a Texas portfolio of 1,361 multifamily units in April from Hilltop Residential with  most of the properties located in the Dallas/Ft. Worth, Houston and San Antonio markets. The acquisition marked Magma’s entry into the San Antonio and Houston multifamily markets.

Magma’s current portfolio also has multifamily properties in its home state of California as well as Arizona and Washington.