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PHILADELPHIA-In one of the largest multifamily transactions in this area in recent years, BPG Properties Group has acquired 22 rental complexes with an aggregate of 3,437 units for $314 million. The seller is Malvern-based National Properties Inc.
The transaction is also locally based BPG's largest amount paid ever, Art Pasquarella, executive vice president and COO, tells GlobeSt.com. "Our multifamily strategy is to buy portfolios versus single properties," he says, "and because of our fund and Madison [BPG's multifamily operating arm], we have the financial capacity to act quickly and the operational capacity to do due diligence efficiently on a multi-property portfolio." Yardley-based Madison Apartment Group will operate the portfolio.
All of the properties are in Eastern Pennsylvania, including the Philadelphia suburbs and areas in and surrounding Harrisburg, Reading, Lancaster and the Lehigh Valley. Joe Mullen, president of Madison, tells GlobeSt.com, "The portfolio is about a 50/50 mix of newer, class A complexes and some built in the late 1960s and early 1970s. All are well maintained and well located in infill locations."
BPG will invest approximately $5 million in renovations, primarily to the interiors and exteriors of the older properties, and anticipates increased occupancy and rent increases following the upgrades. The portfolio is currently 95% leased. Jeff King, National's founder and CEO, tells GlobeSt.com the rental rates in the portfolio "cover a very broad range of from $590 a month to $1,700 a month."
The acquisition was made jointly on behalf of BPG Investment Partnership VII, a $500-million private equity fund, and an unidentified institutional investor. Pasquarella says Fund VII is 80% invested, and the company is now raising Fund VIII. Mullen says this acquisition takes Madison's full portfolio to 24,000 units in 110 properties.
The transaction was capitalized with $94 million of equity and more than $237 million of debt financing. Horsham-based Capmark arranged $212 million through 19 mortgage loans from Freddie Mac, and an additional $25 million was arranged through the retention of existing loans on three of the assets.
King says the portfolio represents 90% of his company's real estate holdings. He and partner Bob Pingitore, executive vice president and CFO, plan to dissolve National and retire. The rest of the company's assets, primarily land in various stages of development, are under contract to an affiliate, which will be reconstituted as RPI Property Group to complete their development.
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