MHN Exclusive: Trade Street Residential Expands Charleston Presence with $48M Apartment Acquisition

Trade Street Residential continues to display its penchant for well-located, high-quality, Class A assets in the South East. The apartment REIT has just completed its third acquisition since its IPO in May.

Talison RowCharleston, S.C.—Trade Street Residential continues to display its penchant for well-located, Class A assets in the South East. The apartment REIT just completed its third acquisition since its IPO in May with the purchase of Talison Row, a 274-unit community located in Charleston’s upscale Daniel Island submarket.

The 2013-built community was developed by a partnership between LIV Development and Spectrum properties, and carried a $48 million sales price ($175,182 per unit). A life company provided acquisition financing. Trade Street Residential entered the Charleston market back in May with the acquisition of St. James at Goose Creek, a 244-unit asset located in the northern Charleston submarket of Goose Creek.

“Part of our strategy is to have efficient growth,” Ryan Hanks, chief investment officer at Trade Street Residential tells MHN. “We don’t want to have one property here, one property there. We seek to enter a place where ideally we could have two or three properties. Charleston is a market we want to be for the long-term.”

Market fundamentals certainly support the case. Boeing recently announced plans to expand its 265-acre campus in North Charleston where it fabricates 787 Dreamliners. Charleston is also a major tourist destination that is now on the routes of several cruise lines. Its two shipping terminals are part of the fourth largest container seaport on the East Coast and are approved for post-Panamax sized ships.

“I think the economy has healed substantially from the recession,” Hanks says. “We are expecting some pretty big announcements by the end of the year close to our Goose Creek property, because that is where you have the available land where major corporations can expand.”

According to data from Colliers International, the Charleston multifamily sector has responded well to improving economic conditions. At the start of 2013, average monthly rents were at an all-time high at $850 a month, while vacancies remained healthy at 7.1 percent (compared to 6.4 percent at the beginning of 2012). Calendar year 2012 saw four new properties deliver 943 units, over 600 of which were absorbed by the beginning for 2013. Investors have taken note of the market’s strength as Charleston’s 2012 transaction volume nearly doubled from 2011 with nine apartment sales.

Talison Row is currently undergoing its initial lease-up, which due to current market strength does not involve concessions. Trade Street Residential is open to further growth in Charleston, and is bullish on several other markets including Dallas, Memphis, Charlotte, Nashville and certain parts of Florida. The goal is to have a young portfolio of well-run assets. Older assets will be evaluated for disposition (a few properties are currently on the market), and that capital will be redeployed on fresh projects.

“We are not trying to reinvent the wheel. Our strategy is pretty straightforward,” Hanks adds. “We like Charleston, and we’d like to continue to expand there, and even move down into Savannah, which is close enough that we could create a regional support to enable operational synergies.”