CHARLOTTE, NC-Grubb Properties has closed on the Grubb Southeast Residential Fund II, its second multifamily fund since 2009 focused on acquiring class B and class C apartment communities in the Southeast. The fund aims to work with joint ventures with institutional and other private investment partners.
"This strategy is right in our wheelhouse, since we have project management and construction experts in house who can provide significant physical and operational improvements to find efficiencies," Andrea Howard, senior vice president of acquisitions at Grubb Properties, tells GlobeSt.com. "We are looking for well-located class B and C communities with 150 units or more located in Charlotte, Raleigh, Atlanta, Greenville, Charleston, Nashville and Chattanooga where we've already done deals."
The new fund has already acquired Sterling Forest in Raleigh and Sterling Oaks near Atlanta. Both properties are currently completing substantial renovation and repositioning programs. The fund has also secured three additional properties that are expected to close within the next two months.
Over the next 24 months, the fund plans to acquire between 3,000 and 5,000 units that will be managed by Grubb Properties. The acquisition strategy is to pursue properties which could benefit from physical and operational improvements, have a minimum of 150 units, and are located in higher barrier-to-entry submarkets within major southeastern metropolitan areas.
"With our past success in this space in the 90s and early successes in this cycle, we've been excited with the interest from both the institutional investment community and private investors," Todd Williams, vice president of Investments at Grubb Properties, tells GlobeSt.com. "Today, this strategy is actually somewhat unique, given that the majority of capital in the multifamily space has been focused on the A class properties in major gateway markets and not on value-add acquisitions in the mid-tier markets where we operate."
Williams points to FCP as a strong partner in the Triangle market because the firm understands why these properties are a compelling value today. Williams also notes the value of private investors that really believe in the multifamily story and opportunity to secure financing at historically low interest rates. He explains, "That was the case with a family that has invested with Grubb Properties for over 17 years and decided to co-invest with the firm in its recent Atlanta acquisition."
Over the past 16 months, Grubb Properties has secured transactions on 10 multifamily communities valued at more than $108 million across in South Carolina, Tennessee, North Carolina and Georgia. Co-investors included a publicly traded company, an educational institution endowment and private investors.
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