"From Dubai's standpoint, this transaction is a coming-out party for them," Robert Landin, a Milestone partner, tells GlobeSt.com. "They're looking to expand their presence all across the US in various product types." Milestone principals have acquired approximately $4.5 billion of real estate in all major product types in the past seven years. They had a preexisting relations with DIG and had been searching for an opportunistic acquisition, he adds.
DIG, an affiliate of Dubai Holding LLC, was formerly known as the Investment Office and rebranded to incorporate and promote its tie to Dubai. DIG began investing in the US real estate market in 2003 through its wholly-owned subsidiary, Longwing Real Estate Ventures, but this is the first time a transaction has been made public.
Mohammed Al Gergawi, chairman of DIG and CEO of Dubai Holding, says the "properties have significant upside potential and will benefit greatly by the infusion of capital." He notes that the portfolio's central locations in the markets of Dallas/Ft. Worth, Houston, Austin, Jacksonville, Tampa, Phoenix, Nashville and Atlanta were a key selling point.
"We will engage in a strategic enhancement program to reposition the properties by initiating a major capital improvement campaign," adds Soud Ba'alawy, DIG's chief executive officer. "Working with The Milestone Group, our aim in this undertaking is to unlock value and unrealized cash flow as the national and local economies continue to improve."
As part of the transaction, Green Park Financial has completed a $322-million credit facility for Milestone. The credit facility was secured by 27 of the properties totaling 8,811 units in Arizona, Georgia, New Mexico, Tennessee and Texas. These loans were closed using a variable rate credit facility with a series of discounted non-interest bearing advances, and have a five-year term with an option to extend for another five years. The loans were underwritten to a 75% loan-to-value. Stuart Wernick of Quantum First Capital, a Green Park Financial preferred correspondent, originated the transaction.
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