RREAF Holdings Adds Workforce Housing with $534M Portfolio Acquisition

The underserved workforce housing apartment market is drawing more interest as evidenced this week with RREAF Holdings’ phase one announcement that it is adding to its portfolio with a 13-asset purchase.

RREAF Holdings LLC, a private real estate investment and development firm based in Dallas, has announced, together with its partners DLP Capital and 3650 REIT, its acquisition of a 13-asset multifamily housing portfolio in the Sun Belt region consisting of 2,000-plus units. 

This is the first tranche of a large, 3-phase acquisition, which is slated to close by early November, and represents one of the largest real estate transactions in the country since the COVID outbreak. 

The entirety of the portfolio totals 21 multifamily communities and 4,000-plus units, and was valued at $534 million. 

“Impacting the crisis of affordable workforce housing is at the heart of DLP Capital’s mission,” said Don Wenner, chief executive officer and founder of DLP Capital. “This portfolio of communities will provide safe and comfortable homes to thousands of working families, and we are excited to work together with partners that align with our mission and purpose. We can do good while doing well for our investors.”

Berkadia arranged the Freddie Mac acquisition financing for the entire transaction and Cushman & Wakefield represented the sellers for the first tranche.

“This large acquisition is a culmination of months of negotiations, due diligence, research and financial structuring,” Kip Sowden, RREAF’s chief executive officer, said. “This is one of the largest real estate transactions in the country since the COVID outbreak. 

RREAF has acquired approximately $1 billion of real estate assets in the past 12 months.

DLP Capital has approximately $2 billion of assets under management.

Deal Brings ‘Proven ‘Value-Add Stories’

Jonathan Roth, managing partner and co-founder of 3650 REIT, stated, “The Sun Belt region continues to see in-migration from higher cost-of-living areas, creating a continued need for well-located, attainable housing in the region. This transaction aligns perfectly with 3650’s investment thesis and focus on properties with long-term potential.”

Cushman & Wakefield’s Taylor Bird, Andrew Brown and Jaime Slocumb represented the sellers in the transaction. “This portfolio is located across the Sunbelt in several high growth markets with proven value-add stories, strong demographics and access to major employers,” Bird said.

3650 REIT, which is taking a preferred equity position in the transaction, manages in excess of $4 Billion in investments.

With the closing of this portfolio, Berkadia will have closed 34 loans with RREAF in a 14-month period with loan balances totaling over $647 million. 

“The portfolio’s value-add make-up fits the ideal profile of an asset class that has outperformed during the pandemic,” Cushman & Wakefield’s Taylor Bird said.

RREAF Residential, a wholly owned subsidiary of RREAF Holdings LLC, and DLP Capital will serve as property managers for all 21 communities.