“While the significant migration to Duluth and Gwinnett County has led to construction of single-family housing, new multifamily starts are very well-regulated by the County, in comparison to Atlanta's urban core, and areas inside and just outside the I-285 Perimeter,” Gillis explains. “Existing product like Merritt at Sugarloaf is in high demand, making the community a solid long-term investment. Further, Merritt presents a strong value-add opportunity, with 117 of the 424 units presenting a built-in $70 premium with light-to-moderate upgrades.”

Merritt at Sugarloaf is a garden-style apartment community consisting of one-, two-, and three-bedroom floorplans. Multifamily community features and amenities include a cyber café, a recently expanded fitness and yoga room, two swimming pools, tennis courts, a playground, outdoor grills, picnic areas, a fire pit, a scenic lake, detached garages and controlled access. According to Gillis, the strength of this acquisition is also made apparent through Passco's success with a similar nearby property acquired in October 2015.

“Beyond these excellent fundamentals, we took advantage of this acquisition opportunity due to our proven success with The Estates at Crossroads, a 344-unit apartment community located in Duluth just three miles from Merritt at Sugarloaf,” Gillis says. “The Estates presented a similar vintage and value-add potential. Throughout the implementation of a light renovation package, we have achieved significant renovation premiums, averaged over 4.5% renewal growth with a 60 percent renewal ratio while maintaining an average occupancy over 96% since takeover. We plan to approach the newly-acquired asset with the same business plan and management as this proven case study.”

The property, which was built in 1999, is located near the Interstate 85/State Route 316 interchange at 2951 Satellite Boulevard Northwest in Duluth, Georgia. The community is currently 95% occupied.

Paul Berry and Shea Campbell of CBRE represented the seller, an affiliate of Roseview Group, a pension fund advisor based in Boston, Massachusetts. Chris Black and Caleb Marten of KeyBank Real Estate Capital's Commercial Mortgage Group arranged acquisition financing on behalf of Passco Companies.