Atlanta Value-Add Portfolio Sells for $42M
- Aug 28, 2019
Tenth Street Ventures and Braden Fellman Group have acquired 13 properties from three sellers in the Morningside/Lenox Park neighborhood in Atlanta for approximately $42 million and will create one unified garden-style community with 335 units that will be rebranded The Piet.
The properties span 12.5 acres and will be connected with walking trails. Community amenities will also include two pools, five dog parks, more than a dozen grill stations, basketball courts, bocce ball courts and putting greens. Artist Chastain Bernard, using the abstract neoplasticism style made famous by Piet Mondrian with black, white and primary colors, will paint the buildings’ exteriors to unify the properties.
The joint venture partners expect to invest about $25,000 per unit in interior and exterior renovations, Brian McCarthy, TSV principal, told Multi-Housing News. Most of the money will be spent on the interiors to modernize and upgrade the1960s- and 1970s-era buildings. Upgrades will include quartz countertops, all new cabinets, new flooring and laundry hookups. The units will have updated technology, including smart locks, doors and thermostats. All the renovations are expected to complete within 18 months.
Aimed at working-class renters, McCarthy said the goal will be to keep the rents under $1,400 or as he put it, “market-rate affordability.”
Assembling the Properties
McCarthy said the joint venture acquired a 117-unit property nearly a year ago and began the process of adding the other nearby properties to create the larger portfolio. They closed on the last property about 30 days ago.
Jake Reid, Chad Defoor and Roger Schoerner of Franklin Street’s Atlanta multifamily investments sales team brokered the deal. Wesley Turner with Krevolin & Horst was the real estate attorney for the deal.
CBRE’s Yakhin Israel arranged a $40.9 million loan with lender MF1 Capital LLC to finance the acquisition and renovations. The loan was funded in two phases to accommodate the sponsors’ closing timeline for the assemblage.
Israel also recently arranged a $9.8 million bridge loan with MF1 for TSV and BFG to acquire and renovate a 67-unit apartment asset in Decatur, Ga. McCarthy said that property will be combined with two others from the same seller to create a larger 103-unit community.
The concept with both The Piet and Decatur communities is the same. “We’re taking some of the older buildings that need a little love, putting that into them and keeping the rents where people can afford to live close to work,” McCarthy said.
Andrew Braden of BFG said he expects the joint venture partnership to continue for future projects. BFG, founded in 1981, owns and manages more than 1,700 apartment units and 55,000 square feet of commercial space in metro Atlanta. TSV, which buys, designs and renovates properties with their in-house team, has gone from zero assets under management to more than $100 million and more than 500 units nationally over the past two years. In addition to several Atlanta-area assets, TSV owns 60 units in Las Vegas and is looking to add more.
In the spring, TSV completed Studio9Forty, a small apartment building at 940 Piedmont Ave. in Midtown Atlanta. McCarthy said they completely renovated the building, including adding eight units for a total of 24 rental apartments.
Elsewhere in the Atlanta area, the multifamily sales market has been busy this summer.
Earlier this month, the Franklin Street team of Reid and Defoor along with colleague Dan Phelan arranged the $18.3 million sale of Lantern Ridge Apartments, a 150-unit community in Marietta, Ga., owned by Nelkin Real Estate, to Liquid Capital Real Estate Partners. Franklin Street’s multifamily investment sales team represented the seller.
Taurus Investment Holdings acquired 251 North, a 192-unit, garden-style community in Atlanta’s Midtown South submarket, from Abacus Capital Group for $36.5 million. JLL arranged the transaction and secured $24.9 million in acquisition financing through a 10-year, floating-rate Freddie Mac loan.
Audubon Communities of Atlanta sold Sundance Creek Apartments, a 232-unit, 26-building multifamily community in the Atlanta suburb of McDonough, Ga., to a joint venture of Providence Real Estate LLC and a global insurance and investment company. The sales price wasn’t released but Audubon had paid $23.5 million for the 15.4-acre asset in July 2017, according to Yardi Matrix data.