Strategic Holdings Recapitalizes Southeastern U.S. Portfolio

Berkadia arranged equity investments for six properties totaling 1,217 units in Florida and Georgia.
Park on the Square. Image courtesy of Berkadia

Strategic Holdings has recapitalized a $138 million, 1,217-unit, six-property multifamily portfolio in Florida and Georgia with $22 million in equity investments from Bluerock Residential Growth REIT. The firm plans to use the capital for property upgrades and new acquisitions.

BRG included information about the equity investments—made between the fourth quarter of 2019 and the first quarter of 2020—in its 4Q 2019 and 1Q 2020 financial results statements. In 4Q 2019, BRG made preferred equity investments totaling $10 million in Belmont Crossing, a 192-unit community in Smyrna, Ga.; Sierra Terrace, a 135-unit community Atlanta, and Sierra Village, a 154-unit community also in Atlanta. During the first quarter of this year, BRG made additional preferred equity investments in the Strategic Holdings portfolio, including a $4 million preferred equity investment in The Commons, a 328-unit community in Jacksonville, Fla. The REIT also invested a total of $8 million in Georgetown Crossing, a 168-unit community in Savannah, Ga., and Park on the Square, a 240-unit community in Pensacola, Fla.

Berkadia’s New York City-based Joint Venture Equity & Structured Capital Group, led by Noam Franklin, Chinmay Bhatt and Cody Kirkpatrick, sourced the new equity investment for Strategic Holdings.

The equity investment comes behind senior Fannie Mae and Freddie Mac loans on each property. Jeremy Lynch, director of mortgage banking in Berkadia’s Philadelphia office, originated four of the six agency loans in the portfolio. The properties were built between 1964 and 1999.

Brian Alonge, Strategic Holdings chief financial officer, said in prepared remarks the fresh capital will enable the firm to enhance the properties in the portfolio and seek new acquisitions throughout the Southeastern United States.

Franklin, managing director & head of Eastern US for Berkadia’s JV Equity & Structured Capital Group, said in a prepared statement the Sunbelt location of the properties and the high caliber of the sponsor generated a lot of interest in the portfolio. He said Strategic Holdings ultimately decided on a publicly-traded REIT that understood the firm’s long-term vision.

Berkadia Transactions

Also this week, Berkadia’s Mid-Markets Group completed the sale of six apartment communities totaling 945 units in six states for $72 million. The apartment communities are located in secondary and tertiary markets: Bowen Tower in Raytown, Mo.; Wilmington Apartments in North Little Rock, Ark.; Village Woods in Milan, Ill.; Brickstone at Woodlawn in Wichita, Kan.; London Square in Tulsa, Okla.; and Central Pointe in Boise, Idaho.

One week earlier, Berkadia arranged the sale of a South Texas apartment community—Regency Square, a 240-unit garden-style property in Corpus Christi, Texas.