Starlight U.S. Multi-Family (No. 5) Core Fund announced that it has sold the Villages at Towne Lake, a 126-unit, 55+ age restricted community in Houston, Texas, and intends to redeploy the proceeds, together with proceeds from the recently announced disposition of Belle Haven Apartments, to acquire Carrick Ben, a 228-unit, Class “A”, garden-style apartment community located in Denver, Colorado.
The Fund expects that the acquisition will be completed on an accelerated basis in order to ensure the Fund’s capital remains fully deployed for the benefit of unitholders and will immediately enhance the geographical diversification of the Fund’s portfolio and create the opportunity for operating economies of scale and net operating income growth while lowering the average vintage age of its apartment communities. The current average age of the Fund’s properties is 2011.
Pursuant to a purchase and sale agreement, Towne Lake Acquisition LLC, an indirectly wholly owned subsidiary of the Fund, sold Towne Lake to an arm’s length third party, unencumbered for the purchase price of approximately US$18.6 million. The proceeds from the sale were partially used to repay the outstanding mortgage balance of approximately US$8.6 million. Pursuant to a purchase and sale agreement made and entered into on June 9, 2017, as amended from time to time, Carrick Bend Acquisition LLC and Carrick Bend 3 Acquisition LLC, indirect wholly owned subsidiaries of the Fund, have agreed to purchase Carrick Bend unencumbered for the purchase price of approximately US$54.5 million. In connection with the acquisition of Carrick Bend, new financing in the amount of approximately US$34.0 million is expected to be secured for a four year and four month term with a one year extension available. Subject to certain conditions, financing is expected to be interest only and payable at an annual rate of LIBOR +2.15%.
“The sale of Towne Lake highlights the Fund’s execution of its business plan to reduce its exposure in any one market,” commented Evan Kirsh, the Fund’s President. “By selling Towne Lake and Belle Haven, two of the Fund’s smallest assets, and entering into an agreement to redeploy the proceeds into Carrick Bend, the Fund is positioning itself to capitalize on enhanced economies of scale while improving its geographical diversity and the average vintage of the Fund’s portfolio.”
Carrick Bend is located approximately 15 miles north of downtown Denver and consists of nine, three-storey walk up buildings on a nine acre site comprised of one, two, and three bedroom units. Each apartment unit at Carrick Bend contains modern interior finishes including gourmet kitchens with European cabinetry and quartz countertops, stainless steel under mount sinks, USB ports, full-size washers and dryers, and private decks or patios with additional storage. Indoor amenities include a state-of-the-art fitness centre, a clubhouse with an entertainment kitchen, televisions and Wi-Fi. Exterior features include a resort-style swimming pool and spa, a fire pit and a courtyard with barbeque grills as well as 78 detached parking garages. As of June 22, 2017, Carrick Bend’s occupancy was 96.1 per cent.
Following completion of the acquisition, the Fund expects to retain Greystar Real Estate Partners, the largest third-party multi-residential property management company in the United States, to property manage Carrick Bend. Greystar currently manages ten communities for Starlight U.S. Multi-Family in Atlanta, Georgia, Denver, Colorado, Houston, Texas, and Nashville, Tennessee.
The Fund portfolio
Following the sale of Towne Lake and acquisition of Carrick Bend, the Fund will have interests in and operate a portfolio comprising 6,692 apartment units in 22 recently constructed, Class “A” stabilized, income producing apartment communities located in Arizona, Colorado, Florida, Georgia, Nevada, North Carolina, and Texas.