Strata Equity Group Buys Southeast Residential Portfolio for $720M

CBRE Capital Markets facilitated the acquisition, which ranks as one of the largest multifamily transactions of the year.
Scott Wittman, Director of Investments at Strata Equity Group

Scott Wittman, Director of Investments at Strata Equity Group

San DiegoStrata Equity Group acquired the 24-property Southeast Residential Portfolio (SERP) from an affiliate of DRA Advisors LLC for more than $720 million. CBRE Capital Markets facilitated the sale, which ranks as one of the largest multifamily transactions in 2016.

CBRE Capital Markets’ Debt & Structured Finance team also secured roughly $500 million of financing for the San Diego-based buyer.

Bill Chiles of CBRE’s San Diego office and Robert LaChapelle of CBRE’s Atlanta office obtained the aggressively priced loans for the properties. Strata Equity Group diversified the loan terms to match each individual asset and will be financing the portfolio with a mixture of seven- and ten-year fixed and floating rate loans provided by Freddie Mac.

SERP consists in 6,294 units located in suburban areas throughout 13 metros in Georgia, North Carolina, Tennessee and South Carolina. “We believe the long-term fundamentals of the apartment sector, particularly Class B product, remain healthy. Our investment in SERP reinforces that belief,” Scott Wittman, Strata’s director of Investments, said in a prepared statement.

The buildings were completed between 1985 and 2000, with 72 percent of the units being two- and three-bedroom apartments and a larger-than-average unit size of approximately 1,100 square feet. SERP has a long track record of rising rents and consistent occupancy. Over the last three years, net rental income has increased 12.2 percent, while averaging 95.3 percent occupancy.

“We are in a favorable market for sellers and buyers to transact in volume. For assets with a consistent and compelling investment thesis, sellers can achieve attractive pricing with less friction. At the same time, the scale of portfolios allows buyers to make strategic, transformative moves,” added Malcolm McComb, vice chairman of institutional properties at CBRE, who led the transaction on behalf of the New York-based seller.

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