RALEIGH, N.C.-Philadelphia-based TRECAP Partners, a managed fund for institutional investors, has acquired majority interest in a 452-unit apartment complex in a joint venture with Robinson Development Group. TRECAP paid $38 million for its stake in Stonehedge Apartments, bringing its year-to-date multifamily acquisition total to $144 million.
Stonehedge was built in four phases between 1985 and 1993. The complex is more than 95% leased and offers opportunities for capital upgrades to increase rents in what the company sees as an improving leasing environment.
“The play is Raleigh,” Michael McNamara, managing director and head of acquisitions for TRECAP, tells GlobeSt.com. “We like Raleigh because of its strength in intellectual capital. We also like the fact that this submarket hasn’t seen anything built in many years. And we are starting to see improvements in rents in the submarket in our existing portfolio.”
The Stonehedge sale continues the Triangle multifamily investment trend. Multi-housing transaction volume in Raleigh-Durham rose to $179 million in the third quarter, bringing total sales volume to $378 million for the year, according to Grubb & Ellis. Demand for multi housing assets has become increasingly competitive in the Triangle, the firm reports, and a significant number of properties have been placed on the market in recent months as owners seize the opportunity to capitalize on strong pricing fundamentals.
Stonehedge is a prime example. Centrally located near I-40 and I-540 in North Raleigh, Stonehenge features garden-style apartments on 47 landscaped acres. The property offers a large clubhouse facility five indoor and outdoor swimming pools, tennis and basketball courts, playgrounds, a business center, and fitness center.
"The Raleigh multifamily market shows signs of strengthening, supported by burgeoning high tech industries and three major research universities in the metropolitan area,” McNamara says. “We believe the investment is extremely well positioned to capitalize on future growth trends."
Indeed, Triangle rental rates continued to increase in the third quarter. Average rates per unit ended at $817, up 1% percent over the second quarter, Grubb & Ellis reports. Leasing demand continued to strengthen, sending occupancy up by 210 basis points to 93.9 percent. New construction remains minimal as developments are put on hold due to financing constraints and developers wait for the economic recovery to gain traction.
“It’s part of our strategy to buy well-located value-add apartments,” McNamara says. “We are focused on markets where there is a higher percentage of college-educated residents because we think those are the kinds of cities that are going to lead us out of the recession through innovation. Raleigh is one of those cities.”
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