Passco Nabs NC Community for $57M

The Asheville Exchange acquisition marks the company’s first foray into the emerging Asheville, N.C. market.
Asheville Exchange
Asheville Exchange

Irvine, Calif.-based Passco Cos. LLC has solidified its Southeast portfolio by acquiring a Class A, 312-unit rental community in Asheville, N.C., for $56.6 million.

Cushman & Wakefield’s Marc Robinson, Jordan McCarley, and Brooks Colquitt represented both the buyer and the seller, Hathaway Development, in the transaction. Chris Black and Caleb Marten of KeyBank Real Estate Capital’s Commercial Mortgage Group arranged acquisition financing on behalf of the buyer.

Built in 2017, Asheville Exchange is located at 105 Exchange Circle and comprises a mix of one-, two-, and three-bedroom units featuring energy-efficient appliances, granite kitchen countertops and tiled backsplash, wine racks, modern cabinetry, and full-size, front loading washer/dryers in select units. The list of amenities also includes bike and kayak storage, clubhouse with Wi-Fi, controlled access gates, car care center, dog park and pet care station, state-of-the-art fitness center, game room, bocce ball court, outdoor lounge and grilling area, resident business center, saline swimming pool, tanning salon and massage room, and valet trash service.

Vibrant Apartment Market

Asheville Exchange represents Passco’s first acquisition in the state in nearly five years, and the company’s first foray into the Asheville market.

The biggest challenge for us was to overcome the initial desktop perception of a market like Asheville,” Colin Gillis, Passco’s vice president of acquisitions, East, told Multi-Housing News.

“Anyone looking at potential acquisition opportunities in the Southeast is very familiar with the major metros in the Carolinas—Charlotte, Raleigh, Greenville, Charleston—and their economic drivers. We currently own or have owned in all of these markets.” 

According to Gillis, these cities generally evoke favor amongst the multifamily investment community as they all have many positive attributes and are attractive target markets for the majority of firms doing business in the Southeast. “Prior to doing any research into the market, our initial reaction (to) Asheville, since it was not one of these major metros, was that it would be a slow-growth, tertiary location with an economy centered around tourism and with very mediocre apartment performance,” Gillis said.

Once the firm had compared initial underwritten returns to those of similar assets in like-sized Southeast markets, Asheville Exchange made its short list of third-quarter deals to pursue. Passco then committed substantial time learning about the market. In the process, it found that Asheville is among the most vibrant apartment markets in the Carolinas.

During its pre-acquisition due diligence, Passco learned that the region has experienced exceptional population and job growth coupled with a lack of quality, scalable housing supply. That has positioned top-of-the-market assets like Asheville Exchange to significantly outperform comparable lease-ups in the major Carolina markets, according to Gillis. 

More than 30,000 people have relocated to Asheville, an MSA just under a half million people, over the last five years. The market currently boasts the lowest unemployment rate in North Carolina. 

What is unique about Asheville is the population growth is being driven by both the Millennial and Baby Boomer generations,” Gillis said. “The market is seeing huge employment gains in healthcare and education sectors as well as major expansions from household names like GE Aviation and Duke Energy.” 

In October, Chaucer Creek Capital, Richardson Properties and Kassinger Development Group have obtained a $39.2 million refinancing for Audubon Place, a 342-unit property in Arden, N.C., on the Asheville City line in Buncombe County.

Image courtesy of Passco Cos.