(Read more on the multifamily market.)
CHICAGO-Henderson Global Investors, based here, has closed on acquiring equity for its CASA Four multihousing fund, and has purchased four properties for the fund. Henderson has raised $205 million in equity. The fund is expected to have a total value of $585 million when totally committed, using a maximum of 65% leverage. Henderson expects between 15 to 20 assets in the portfolio when fully committed. The fund will seek a return of between 12% and 14% from the assets, says Jay Martha, director of property portfolio management at Henderson. With the acquisition of four properties and a fifth that is expected to close today, the fund is 30% committed, Martha tells GlobeSt.com.
The portfolio will consist mainly of "institutional quality" properties that have at least 200 units, are near major metropolitan areas and "usually with good access to the interstate system," were constructed in the 1980's or more recently and have a mix of one- and two-bedroom units with 5% to 15% three-bedroom units, Martha says. The portfolio will also be geographically diverse with properties in the East, Midwest, South and West, he says.
Henderson has already acquired four garden-style apartment properties for the fund and is expected to close on the fifth property today, he says. The four properties are Glenlake Club, 1400 N. Oakmont in Glendale Heights, IL; the Burlington, 1180 Cushing Circle, St. Paul, MN; the Mansion, 2905 Lee's Summit Rd., Independence, MO; and Vista Pointe, 1402 N. Grand Ave., Covina, CA. Sales prices were not disclosed, but the 427-unit Burlington was acquired for approximately nearly $38.9 million, sources say. The 336-unit Glenlake Club reportedly sold for $34.95 million. The four properties have a total of more than 1,500 units and all of the properties have occupancy rates of more than 90%, Martha tells GlobeSt.com.
The four properties were financed with tax-exempt bonds, Martha says. CASA Four is a value-add fund with some of the value being derived with the tax-exempt bonds. "It provides some of the value enhancement and enhanced return," Martha says. "It happens to provide a higher income component of the entire return because the debt cost is lower." Henderson also completes some renovations to the buildings in the portfolio. For the four properties already acquired, Henderson will complete "light to moderate renovations" to the properties, such as renovations to the kitchens and baths, exterior renovations to the roofs and siding and improvements to the landscaping and parking lots.
Henderson is expected to close today on a property near Baltimore, Martha tells GlobeSt.com. The property has more than 200 units and is more than 90% occupied. The apartment complex was constructed in the early 1990's and will have only "light" renovations done, he says.
Henderson started the first CASA Fund in 1993, Martha says. Investors include four US Public funds and one corporate pension plan. Two of the investors for this fund have invested with the previous three funds and another investor also invested in CASA Three, Martha says.
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