FAIRFAX, VA–Apartment Investment and Management Co. has acquired the Bent Tree apartment community here for $160 million.
Bent Tree, which has 748 apartment homes, is located near two other Aimco communities that total 1,000 units, giving the REIT an economies-of-scale advantage. Another plus for Aimco: the Class B apartment community's average rents are approximately $1,500 per unit, which means it can drive revenue growth through in unit improvements.
Aimco's general approach to acquisitions is to sell an apartment of equivalent value that has lower expected free cash flow internal rates of return and lower rental growth prospects. The REIT expects the FCF IRR of Bent Tree to exceed by at least 300 basis points the FCF IRR of the properties sold to fund the acquisition.
It also expects the acquisition will deliver an expected $0.01 per share increase to Adjusted FFO in the first twelve months that its owns the property.
The acquisition was funded with bank borrowings pending the expected third quarter sales to complete the paired trade funding.
Local Sales of Lower-Rated Apartments
In its fourth quarter 2017 earnings statement, Aimco reported that it sold five lower-rated apartment communities with 2,291 units for gross proceeds of $397 million and $381 million in net proceeds. Two of these properties are affordable communities in Washington, DC and Philadelphia, and three are in southern New Jersey and southern Virginia.
In January 2018, Aimco sold three additional apartment communities with 513 apartment unit for gross proceeds of $72 million and $65 million in net proceeds. Two of these communities are located in southern Virginia and one is located in suburban Maryland.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
