TODAY’S DEALS: MG Properties Group Acquires Mixed-Use Condo Conversion

MG Properties Group buys a 33-unit condo conversion for $11.8 million; IPA brokers the sale of a 392-bed student housing community at USC; and Walker & Dunlop provides Freddie Mac funding to two student housing properties.

Ocean Village

Oceanside, Calif.—MG Properties Group knows a good deal when they see one. The firm recently acquired Ocean Village, a 63,000-square-foot mixed-used community located in Oceanside, Calif., for $11.8 million. The property was built in 2009 and contains 10,676 square feet of retail space and 33 large condominium units that average 1,600 square feet in size. Because no units were sold when the project was originally completed, MGPG plans to offer the remaining units for lease.

“Ocean Village represents the opportunity to acquire a quality new-construction property in a premium Southern California beachside location at a substantial discount to replacement cost,” says Mark Gleiberman, president of MGPG. “We are constantly on the lookout for properties with this profile and are pleased to add this high-value asset to our portfolio.”

The company plans to invest some capital into the property for upgrades that will make units more attractive to potential residents and improve the visibility and quality of the retail space for tenants.

“Unfortunately this project was opened at the depth of the recession and never had a chance to build momentum, but we believe the building is well designed for the market,” says Justin Smith, senior vice president at MGPG.

MGPG purchased Ocean Village through its Private Capital Group, a pool of high-net-worth investors located in and around San Diego. KeyBank National Association financed the balance of the transaction.

MG Properties Group has acquired 1,150 units with a value exceeding $160 million in the past year. The firm plans on closing an additional $200 million in acquisitions over the next 12 months.

IPA brokers the sale of USC student housing complex

West 27th Place

Los Angles—Institution Property Advisors, the recently formed multifamily brokerage division of Marcus & Millichap, has brokered the sale of West 27th Place, a newly built 161-unit, 392-bed student housing development situated next the University of Southern California’s main campus. The community was sold by a joint venture between CityView and Symphony Development. Kayne Anderson Real Estate Advisors picked up the community for an undisclosed amount.

“The USC market continues to be one of the most desirable markets in the Los Angeles MSA, with occupancies in the high 90 percent range,” says Ron Harris, executive vice president of investments at IPA’s Los Angeles Office.

“Core student housing assets, located on smaller sites in constraint-restricted submarkets at Tier I universities, create demand from both market rate and student housing institutional capital at risk adjusted, compressed cap rates and yields,” adds Peter Katz, senior vice president of investments at IPA’s Phoenix office.

West 27th Place is a seven-story, LEED-registered community that is projected to reach platinum certification. The 2011-built property offers a 24-hour gym, tanning beds and in-unit laundry. Additional amenities include a saltwater pool, 24-hour computer lab, study rooms, and a furnished game room.

Walker & Dunlop provides Freddie Mac funding to two student housing properties

Baton Rouge, La.–Walker & Dunlop LLC announced it recently provided financing for two student housing developments: the Cottages of Baton Rouge located in Baton Rouge, La. and the Lodges of East Lansing located in East Lansing, Mich.

The acquisition loans for both properties were structured with a 10-year term with one-year interest only and a 30-year amortization using Freddie Mac’s Early Rate Lock (ERL) Process under their Capital Markets Execution (CME). Both loans were underwritten to a 75 percent Loan-to-Value with a 1.35 Debt-Service Coverage.

The borrower, Kayne Anderson Real Estate Advisors (KAREA) utilized Freddie Mac’s Early Rate Lock which allowed them to lock the interest rate before Phase II had been completed for the upcoming school year in Baton Rouge, and prior to the students entering their units for the fall term in East Lansing. Both properties are managed by The Capstone Companies.

“We are extremely happy to have worked with Will Baker and his team at Walker & Dunlop on these student housing transactions,” says Frank Duemmler, COO and CIO of KAREA. “Freddie Mac and Walker & Dunlop structured these deals with Freddie Mac’s ERL process, allowing us to eliminate our interest-rate risk and ensure we secured a rate that worked with our models. Walker & Dunlop’s professionalism and experience throughout the process were paramount to getting these deals done in a timely manner. We look forward to working on other transactions with Will Baker and his team at Walker & Dunlop again.”

The Cottages of Baton Rouge was built in two phases in 2010 and 2011 and offers students a unique “cottage-style” living experience, currently not found elsewhere in the market. The property features 1,290 beds in 382 units, designed in a variety of floor plans. A majority of units are designed as individual homes, or “cottages,” giving the property the feel of a residential sub-division. The development also offers an extensive amenity package which includes a fully equipped 24-hour clubhouse, resort-style swimming pool and an outdoor fireplace and barbecue pavilion with flat-screen TVs. The property was 100 percent occupied at closing.

The Lodges of East Lansing was built in 2011 and features 220 units laid out in “lodge-style” housing, an architectural design recently proven popular for students. The property offers a premium amenity package including a state-of-the art clubhouse and recreation center. Unit amenities include free cable and Internet, private bathrooms, vaulted ceilings and full size washer/dryer units. The property was 100 percent occupied at closing.

Tim Bradley of TSB Capital Advisors originated the loan. Walker & Dunlop Vice President Will Baker led the Walker & Dunlop team.

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