Waterton Moves into Nashville With $140M Buy

Nashboro Village. Image courtesy of Waterton

National multifamily manager Waterton has ventured into Nashville’s booming apartment market by adding a 994-unit development to its $5.6 billion real estate platform, marking one of the city’s largest property deals in recent years.

Although Waterton did not disclose the deal price, Davidson County records lists it as $140 million. That price tag far outstrips the $101.5 million that CBRE Global Investors paid in mid-2019 for The Gossett on Church, a modern 367-unit community in downtown Nashville.

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The community, Nashboro Village, is located a few miles south of Nashville International Airport and consists of 69 low-rise buildings across five phases, completed between 1974 and 1987. The previous owner, Starwood Capital Group, acquired the asset as part of a $2.9 billion nationwide portfolio transaction from The Milestone Group in April 2017, according to Yardi Matrix.

Value-Add Target

The 69-acre Nashboro Village sprawls along Nashboro Boulevard within a larger 400-acre master-planned area. The property, which adjoins U.S. Route 41 and a shopping center with a Kroger grocery store, consists of the following phases:

• Center Court (740 Nashboro Blvd.): 50 units
• Deerfield (300 Long Hunter Lane): 296 units
• Doubletree (2228 Doubletree Lane): 200 units
• Village Green – now Vista Glen (325 Village Green Drive): 328 units
• Village Hills (620 Village Hills Drive): 120 units

Nashboro Boulevard & Long Hunter Court within the village. Image via Google Street View

The village’s two- and three-story buildings offer a mix of one-, two- and three-bedroom rental units, and occupancy rates generally hover above 93 percent at each of the phases, according to Yardi Matrix records. Rents on available units range from $1,045 to $1,575, information on the property’s website suggests.

Select residences offer wood-burning fireplaces, private patios or balconies, in-unit washer and dryer connections and detached covered parking. Community amenities include seven outdoor swimming pools, tennis courts and a clubhouse.

Matt Masinter, senior vice president of acquisitions at Waterton, said in a statement that the company has been eyeing the Nashville market for a while, waiting for the chance to pick up an asset of Nashboro Village’s size, complexity and value-add potential.

The Chicago-based firm, which will take over operations from Highmark Residential, plans to invest in upgrades to the residences and common areas to make them competitive with existing stock in the area. Waterton also hinted that it would consider exiting the investment by ultimately selling off the phases separately.

Music City Booms

Waterton is stepping into a hot market. Average effective rent for Nashville apartments soared 7.9 percent year-on-year in the third quarter of 2019, according to a report by Marcus & Millichap. That included 11 percent Class A rent growth and 6.5 Class B rent growth, rising to $1,779 and $1,219 per month, respectively.

Vacancy declined 80 basis points to 3.8 percent amid heavy net absorption and a slowing construction pipeline, the sharpest contraction since 2012. Multifamily transaction volume climbed 16 percent year-on-year through September, the report found.