Equus Capital Partners Snags 500-Unit Atlanta Property
- Jun 19, 2017
Private equity real estate fund manager Equus Capital Partners Ltd. has acquired Viera Briarcliff, a 500-unit garden-style apartment community in the coveted Druid Hills neighborhood on the east side of Atlanta. Druid Hills is known as home of both Emory University and the Centers for Disease Control.
Located on North Druid Hills Road, Viera Briarcliff stands at the hub of four economic centers. They are the Emory-Clifton Corridor, Buckhead, Midtown-Downtown and Perimeter Center, which together employ more than 500,000 people and host 16 Fortune 1000 headquarters, one of the largest concentrations in the United States.
Viera Briarcliff was 93 percent occupied at the time of closing.
Location, Location, Location
A very familiar rationale underpinned the decision to acquire the property.
“First of all, [it was] location, location location,” Equus vice president Steve Pogarsky, who shepherded the transaction, told MHN. “Secondly, by implementing certain water saving measures at the property we were able to obtain favorable financing. The asset qualified for Freddie Mac’s ‘Green Up’ loan program. Through this program, we were able to both increase our loan proceeds by $1.3 million and lower our interest rate by 21 basis points as compared to their conventional loan program.
“Lastly, while the interiors of the property had been recently upgraded, its exterior was dated and in need of new roofs, exterior painting and landscaping [and] drainage upgrades. We plan to address this by replacing the roofs, painting the exterior and addressing the deficiencies in landscaping [and] drainage, among other items. This work combined with additional interior upgrades will increase the desirability of this property to potential renters and allow us to grow our rents and NOI.”
The apartment community is near the brand new $1 billion pediatric hospital under development by Children’s Healthcare of Atlanta, near upscale neighborhood retailers and within a 10-minute drive of luxury regional retail centers Lenox Square and Phipps Plaza.
A Desirable Asset
The acquisition was made on behalf of Equus Investment Partnership X LP, a $361 million discretionary equity fund managed by Equus. Management of the community will be handled by Madison Apartment Group LP, the multifamily operating arm of Equus.
“Our expectation is that we will earn a mid-teens leveraged IRR over a five-year hold period,” Pogarsky said. “Our seven-year fixed-rate financing has five years of interest only payments and as a result, we expect approximately half of our total return to be earned on a current cash yield basis. In addition, we have arranged for pre-payment flexibility after five years so that we can pay off our loan at par with no yield maintenance any time after five years, providing us with flexibility.”
Viera Briarcliff offers a blend of newly renovated one-, two- and three-bedroom apartment homes. Among the resort-style amenities are an outdoor swimming pool, sprawling fitness center, car-care center, barbecue grills, picnic area with fire pit and tennis courts. Equus plans to invest almost $3 million in community improvements. They will include the exterior and unit enhancements as well as a comprehensive rebranding program to reflect a community rechristening as Madison Druid Hills.
“There were many bidders for this desirable asset and at the finish line there were several bidders in a tight pricing range, including us,” Pogarsky said.
“Our access to our fully discretionary $361 million Fund X combined with our local operating experience and aggressively shortened due diligence [and] closing period convinced the seller we were the safest and surest execution buyer. And we were ultimately selected as the buyer.”