Passco Acquires Luxury Alabama Apartment Community
- Jul 23, 2012
Birmingham, Ala.—In a multimillion-dollar transaction, Irvine, Calif.-based real estate investment firm Passco Companies LLC has acquired a 260-unit luxury apartment community called Stonegate in Birmingham, Ala.
Rock Apartment Advisors’ Ryan Griffin handled the transaction, representing both Passco Companies LLC, and the seller, EBSCO Income Properties LLC.
When seeking acquisition targets, Passco prefers secondary and tertiary markets with positive job growth and higher cap rates than found in larger gateway metros. It had earlier acquired Carrington Park Apartments in Montgomery, making the purchase of Stonegate its second in Alabama this year.
“This property is located in a secondary growth market,” Gary Goodman, senior vice president of acquisitions for Passco Companies LLC, tells MHN. “We are targeting this market along with many others mostly located in the Southeast U.S. The risk-adjusted returns are superior to those available in the primary or so-called gateway markets. Our strategy is to acquire newly built properties to hold long term at free and clear yields at a minimum of 6.5 percent.”
Stonegate is a five-year-old Class-A garden-style rental community within the upscale Oxmoor/Lakeshore Parkway corridor at 101 Leaf Lake Boulveard. It features expansive one-, two- and three-bedroom apartments. Features and amenities include nine-foot ceilings with double crown molding, ceiling fans throughout, fireplaces, gourmet kitchens, computer nooks, reclining garden tubs and laundry rooms with washer/dryer connections. The community is situated within a peaceful and leisurely setting offering open space and walking trails.
Stonegate is part of the submarket of south Birmingham, which is an emerging center of high growth. A high-tech data center and a 100-acre distribution facility are among more than $300 million worth of commercial developments planned for that area. The submarket is also home to a master-planned development called the Ross Bridge Resort Community, featuring the Robert Trent Jones Oxmoor Valley Gold Course and a “hometown atmosphere.”
Passco plans to implement a renovation strategy encompassing the community amenities and unit interiors, says Jeffrey Olshan, vice president of asset management with Passco Companies LLC. “The clubhouse and model will be updated with a new, more contemporary appearance, including paint color, installation of new furniture, artwork and accessories,” he reports.
“The existing cyber café will be updated with more seating and faster wireless Internet access. A dog park will be installed to give the residents a place to let their dogs off leash and exercise.”
In addition, he says, all first-floor units will be upgraded with faux wood flooring to give them a more luxurious feel. And residents will be given access to an online concierge service with 24-hour service, through which they will be able to pay rent online, make dinner reservations, plan trips and schedule wake-up calls.