Contour Development Pays $94M for Alabama Portfolio
- May 14, 2019
Contour Development, a Michigan-based real estate investment and development firm, has purchased three multifamily properties encompassing 1,816 units in Birmingham, Ala. The company paid $93.5 million for the assets in the largest transaction closed in the market in five years.
The seller, a Texas-based real estate firm, had owned the properties since 2013, when they were acquired with two other assets, according to Josh Jacobs, director of Cushman & Wakefield’s Southeast Multifamily Advisory Group. Jacobs and Executive Managing Director Jimmy Adams represented the seller.
Jacobs told Multi-Housing News the properties—The Park at Buckingham in Homewood, Ala., and The Park at Callington and Carlyle, adjacent properties in Birmingham which share amenities and operate as one entity—attracted interest national and international potential buyers. Institutional investors from Canada, the Middle East and South America were among the international firms interested in the portfolio.
Jacobs said the properties, particularly the 583-unit The Park at Buckingham asset, are very much high barrier entry communities. Homewood has a top-rated school system in the state and also has a limited number of multifamily developments. “The city of Homewood heavily restricts any kind of multifamily development unless it is Class A plus,” Jacobs told MHN.
All three of the properties were built in the 1970s and are considered value-add, Jacobs noted.
Contour Development has taken on similar value-add projects in the Midwest and Southeast, he said. “They have a robust business plan on how to move forward and reposition these properties,” Jacobs told MHN. “There is a pent-up demand in the renter market for renovated product. And they won’t be competing with much new supply.”
Amenities at the Park at Buckingham include lighted championship-size tennis courts, sand volleyball court, two pools with sun decks and a theater room. The Park at Callington and Carlyle, which have a total of 1,233 units, share a leasing office and amenities, including lighted tennis courts, three pools with sun decks, volleyball court and fitness center. The assets are all located near Homewood and downtown Birmingham’s employment centers, including the University of Alabama at Birmingham, the state’s largest employer.
Cushman & Wakefield’s Southeast Multifamily Advisory Group is ranked No. 1 in market share in 2018 with closed transactions of more than $5 billion in sales volume. Jacobs and Adams recently closed another large multifamily deal—a $70 million portfolio sale of three properties with a total of 825 units to three separate buyers in Hoover, Ala. Hoover also has top-rated schools and a very high barrier to entry, Jacobs noted.
The Birmingham market has seen increased multifamily activity in recent weeks. Last week, InterCapital Partners sold Park at Galleria, a 431-unit, Class B community in Hoover, to First Communities Management for $37.8 million, according to Yardi Matrix. The new owner plans to renovate the asset and rebrand it as Latitude at Riverchase.
In April, a private investor sold Hillside West Apartment Homes, a 74-unit Class C community in Birmingham to 1Sharpe Capital for $2.7 million, according to Yardi Matrix. The seller had owned the property for more than a decade.