McDowell Properties Sells Multifamily Portfolio

Cushman & Wakefield facilitated the sale of the three assets, which included a total of 697 units in Kentucky and Mississippi.
Savannah Creek. Image courtesy of Cushman & Wakefield

McDowell Properties has sold a three-property portfolio to two buyers, with Covenant Capital Group acquiring the 240-unit Fairways at Hartland in Bowling Green, Ken., and Timberland Partners purchasing both the 204-unit Savannah Creek in Southaven and the 253-unit The DeSoto in Horn Lake, Miss.

Cushman & Wakefield’s Jimmy Adams, Robbie O’Bryan and Craig Collins facilitated the deal on behalf of the seller.

“The scale of the portfolio brought a wide range of investors to the table,” O’Bryan, Cushman & Wakefield’s director, told Multi-Housing News. “Ultimately, the appeal of the deals was the value-add potential coupled with emerging secondary markets around the South.” 

Originally constructed between 1989 and 1995, all three assets are situated in high-growth markets with outstanding employment gains and expanding key industries.

“These markets are certainly considered secondary/tertiary. However, they have seen steady population and job growth which has accelerated rents,” O’Bryan said. “The investor market likes the fundamentals surrounding these locations because they provide steady cash-flow in markets that allow them to get a slightly higher yield and prices that keep their basis low compared to the major markets in the Southeast.”

Substantial Interest in Properties

The three properties—Fairways at Hartland, located at 850 Wilkinson Trace; Savannah Creek, located at 385 Nail Road E.; and The DeSoto, located at 1000 Sutton Place—are also within minutes of quality retail and surrounded by dense job cores.

According to Cushman & Wakefield’s team, there was a lot of interest in the portfolio with more than 100, including the offers in individual properties. O’Bryan noted that within each of the markets, they are seeing property appreciation through rent growth as well as a demand for nicer finishes within units.

“Clearly, the market is hungry for valuable, cash-flowing real estate with value-add potential in emerging markets,” O’Bryan said. “The seller was closing out their fund, so timing made sense. They had completed their business plan by pricing out rent premiums through renovations. This allowed the buyers to underwrite growth through organic movement as well as a pop to finish the rehab. The renters in these markets are willing to pay for renovated units.”

The buyers are expected to continue or add on to the renovation done by the previous owner. 

In May, McDowell Properties acquired the 561-unit Creekside at White Oak in the Atlanta suburb of Newnan, Ga.