CBRE Capital Markets has arranged one of the largest multifamily transactions of 2016, placing $500 million of Freddie Mac financing on Strata Equity Group’s $720 million acquisition of a 24-property portfolio spanning four US states.
The Southeast Residential Portfolio (SERP) portfolio consists of 6,294 units in suburban locations throughout 13 metro areas in Georgia, North Carolina, Tennessee, and South Carolina. An affiliate of New York-based DRA Advisors was the seller.
CBRE could not comment on pricing in time for publication but in a prepared statement described the financing, secured by Bill Chiles and Robert LaChapelle on behalf of the borrower, as “aggressively priced.”
“Strata Equity Group diversified the loan terms to match each individual asset and will be financing the portfolio with a mixture of seven- and 10-year fixed and floating rate loans,” the statement read.
Chiles added: “We were able to procure multiple tranches of loan structures to best fit the client’s individual asset strategy. 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 properties were completed between 1985 and 2000, with two- and three-bedroom floor plans making up 72 percent of the units, and offer “proven performance with a long track record of rising rents and consistent occupancy,” according to CBRE, which noted that net rental income over the last three years has increased 12.2 percent while averaging 95.3 percent occupancy.
“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,” according to a statement from Strata Equity Group’s senior management. “We believe the long-term fundamentals of the apartment sector, particularly Class B product, remain healthy; our investment in SERP reinforces that belief.”
The San Diego-based firm secured a similarly-sized Freddie Mac loan totaling $495 million in May of last year on its purchase of a portfolio of 12 apartment communities from Blackstone.
The most recent Freddie Mac deal of similar size was a $469 million refinance package that Walker & Dunlop secured for Cortland Partners on 13 of its multifamily properties in Texas, Georgia and Florida.