TODAY'S DEALS: MAA Buys 240-Unit Community in Virginia

MAA buys a community in Chesapeake, Va.; a 272-unit purchase expands Bascom's Texas portfolio to 20 properties; and Johnson Capital arranges a preferred equity investment of under $1 million.

Adalay Bay

Chesapeake, Va.—MAA has completed the acquisition of Adalay Bay, a 240-unit community located in Chesapeak, Va., part of the Norfolk-Virginia Beach-Newport News MSA.

“We are excited to be expanding our operations in southeast Virginia,” says Al Campbell, executive vice president and chief financial officer at MAA. “Chesapeake’s growth in employment opportunities supports its recognition as having one of the strongest economies in the United States.”

The community’s amenity package includes a pool, a picnic area with grills, and detached garages. Units average 1,026 square feet in size. MAA funded the purchase with a public offering of 1,955,000 shares of stock earlier in the year.

Bascom Buys a Texas Community

Dallas—The Bascom Group LLC has expanded its Texas portfolio to 20 properties with the purchase of Villas at Monterey, a 272-unit community located in Dallas. Terms of the transaction were not disclosed.

Villas at Monterey was constructed in three phases and covers approximately 14.5 acres. The community is comprised of 21 apartment buildings, 26 residential duplexes, one leasing center and a storage facility. Units range in size from 600 to 1,628 square feet. Amenities include two pools, a community playground, five laundry rooms, storage rooms and a standalone leasing center.

Johnson Capital arranges preferred equity investment of under $1M

San Francisco—Johnson Capital announces that Thomas Bracken, senior vice president in the firm’s Palo Alto office, has arranged a preferred equity investment of just under $1 million for a 50-unit apartment complex in the San Francisco Peninsula area.

The property owner is a partnership controlled by a Palo Alto-based real estate investment company, which owns multiple multifamily properties in the San Francisco Bay Mid-Peninsula markets as well as a portfolio of office buildings in Portland, Ore. and Seattle, Wash. Bracken has helped place financing on several of the company’s properties. The new investor in the Peninsula property is an institutional opportunity fund based in Kansas City, Mo. The term of the investment is intended to be three years or less, and the funds will be used to recapitalize partnership interests.

This transaction required a creative financial solution for several reasons. First, there was an existing mortgage on the property, which Bracken had arranged six years ago, that the owner wanted to keep in place. Next, the first mortgage precluded the placement of any secondary debt financing. Lastly, the size of the capital raise was smaller than is common for this type of investment.

Commenting on the transaction, Bracken noted that “this deal was exceedingly challenging to get closed. When I was looking for investors, there were many who would have been interested if the amount of preferred equity could have been in excess of $2 million, but since the property would not support that level of a preferred equity investment, it shrunk the pool of potential investors. The amount, however, did happen to fit a small gap the new investors had in their fund, which made this deal attractive to them.”

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