Bill Chiles of CBRE's San Diego office and Robert LaChapelle of CBRE's Atlanta office secured the loans for the portfolio. Strata diversified the loan terms to match each individual multifamily asset and will finance the portfolio with a mixture of seven- and 10-year fixed and floating rate loans via Freddie Mac.

“We were able to procure multiple tranches of loan structures to best fit the client's individual asset strategy,” Chiles says. “We negotiated a portion of the portfolio under a newly-created version of the Freddie Mac Revolving Credit Facility. This facility gives Strata Equity Group more financing flexibility for certain assets, as well as an attractive vehicle for new purchases with similar business plans.”

The multifamily properties range in age from 1985 to 2000, with an average year built of 1996. The mix of the assets is diversified with 72% of the multifamily units being two and three-bedroom floor plans and a larger-than-average unit size of approximately 1,100 square feet. The multifamily portfolio offers proven performance with a long track record of rising rents and consistent occupancy. Over the last three years, net rental income has increased 12.2% while averaging 95.3% occupancy.

The demand for these B class multifamily units is reflected by the national vacancy rate for B and C communities: 3% in the first quarter versus 4.1% for A class properties, according to Waterton. Historically, the A vacancy rate has trended below that of B and C multifamily properties, so the latest numbers represent a shift. While this can be partially attributed to all of the new A supply that has come online, it's driven largely by the affordability of existing multifamily communities combined with a lack of new construction in this segment of the market, according to Waterton.

“A shortage of skilled labor and increasing labor and land costs are some of the primary factors driving overall housing costs,” Philip Martin, vice president of market research at Waterton, tells GlobeSt.com. “Zoning and entitlement challenges, which can take time and be costly in many Atlanta submarkets, also contribute to increasing housing costs. All of these factors increase housing development costs and limits or delays the incremental, and more affordable, housing supply. This is especially true among single-family home builders, where labor and land costs don't allow them to build the 'entry level' home, except in more remote parts of the metro where many first time home buyers do not want to live.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

ATLANTA—The Southeast Residential Portfolio (SERP), a group of 24 multifamily property properties, has traded hands. San Diego-based Strata Equity Group acquired the assets for more than $720 million from an affiliate of New York-based DRA Advisors. The acquisition is among the largest multifamily transactions in 2016.

“This portfolio affords us with a truly unique opportunity to scale our platform while also securing a very attractive, risk-adjusted return for our investors,” says David Michan, president of Strata Equity Group. Scott Wittman, Strata's director of investments, added: “We believe the long-term fundamentals of the apartment sector, particularly class B product, remain healthy. Our investment in SERP reinforces that belief.”

CBRE Capital Markets' Debt & Structured Finance team secured approximately $500 million of financing on behalf of Strata for the acquisition of the portfolio. The multifamily portfolio includes 6,294 units in suburban locations throughout 13 metro areas in the southeast region of the United States. The properties span four states: Georgia, North Carolina, Tennessee, and South Carolina.

“We are in a favorable market for sellers and buyers to transact in volume,” says Malcolm McComb, vice chairman of Institutional Properties at CBRE, who led the transaction for the seller. “For assets with a consistent and compelling investment thesis, sellers can achieve attractive pricing with less friction. At the same time, the scale of portfolios allows buyers to make strategic, transformative moves.”

Bill Chiles of CBRE's San Diego office and Robert LaChapelle of CBRE's Atlanta office secured the loans for the portfolio. Strata diversified the loan terms to match each individual multifamily asset and will finance the portfolio with a mixture of seven- and 10-year fixed and floating rate loans via Freddie Mac.

“We were able to procure multiple tranches of loan structures to best fit the client's individual asset strategy,” Chiles says. “We negotiated a portion of the portfolio under a newly-created version of the Freddie Mac Revolving Credit Facility. This facility gives Strata Equity Group more financing flexibility for certain assets, as well as an attractive vehicle for new purchases with similar business plans.”

The multifamily properties range in age from 1985 to 2000, with an average year built of 1996. The mix of the assets is diversified with 72% of the multifamily units being two and three-bedroom floor plans and a larger-than-average unit size of approximately 1,100 square feet. The multifamily portfolio offers proven performance with a long track record of rising rents and consistent occupancy. Over the last three years, net rental income has increased 12.2% while averaging 95.3% occupancy.

The demand for these B class multifamily units is reflected by the national vacancy rate for B and C communities: 3% in the first quarter versus 4.1% for A class properties, according to Waterton. Historically, the A vacancy rate has trended below that of B and C multifamily properties, so the latest numbers represent a shift. While this can be partially attributed to all of the new A supply that has come online, it's driven largely by the affordability of existing multifamily communities combined with a lack of new construction in this segment of the market, according to Waterton.

“A shortage of skilled labor and increasing labor and land costs are some of the primary factors driving overall housing costs,” Philip Martin, vice president of market research at Waterton, tells GlobeSt.com. “Zoning and entitlement challenges, which can take time and be costly in many Atlanta submarkets, also contribute to increasing housing costs. All of these factors increase housing development costs and limits or delays the incremental, and more affordable, housing supply. This is especially true among single-family home builders, where labor and land costs don't allow them to build the 'entry level' home, except in more remote parts of the metro where many first time home buyers do not want to live.”

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.