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Real Estate - Residential

Philadelphia REIT To Acquire Brunswick Co. Apartments In Portfolio Purchase

By Cece Nunn, posted Sep 13, 2017
Brunswick Point shown in 2015, when the Leland apartment community was called HunterStone. (GWBJ file photo)
A real estate investment company based in Philadelphia is acquiring two Brunswick County apartment communities as part of a pending nine-community portfolio purchase that has a total price of $228 million.

The purchase by the publicly traded firm, Independence Realty Trust Inc. (NYSE: IRT), will include the 288-unit apartment complex Brunswick Point (formerly HunterStone Apartments) in Leland and the 168-unit Tides at Calabash in Sunset Beach.

The Brunswick County apartments will represent a first for IRT.

"The North Carolina communities were attractive to us because of our regional based management platform," IRT officials said in an email.  "We do not have any communities in SE North Carolina, but we do have two communities in Charleston and five in Raleigh. These properties will be easily incorporated into our portfolio."

The other apartments are in Ohio, Indiana, Georgia, Louisiana and North Myrtle Beach, South Carolina. IRT reached an agreement Sept. 3 to buy the properties from Hamilton Point Investments LLC, a Connecticut-based private-equity company, according to a report by Trepp, a firm that maintains a database of securitized mortgages for the commercial real estate and banking industries, and an SEC filing.

IRT will assume a total of $58.5 million in existing debt on three of the properties, including Brunswick Point, 1001 HunterStone Drive in Leland. Built around 2005, Brunswick Point was 89.2 percent occupied as of July 31 with an average rent of $817 per unit, according to a SEC filing on the purchase. Trepp's report pointed out that Brunswick Point, which was purchased by Hamilton Point in 2015 for $25 million, serves as collateral for a $19 million mortgage.

The Trepp report said Tides at Calabash, 7112 Town Center Road in Sunset Beach, is one of five of the properties that are encumbered by commercial mortgage-backed securities (CMBS) debt that is expected to be retired. Tides at Calabash was 97 percent occupied as of July 31 and has an average rent of $838 per unit, the SEC filing said.

"It [Tides at Calabash] serves as collateral for a $6.9 million mortgage that was securitized through Wells Fargo Commercial Mortgage Trust, 2015-C31. The loan pays a 4.73 percent coupon and matures in 2020," the Trepp report said.

An IRT news release said the transaction is expected to close in two stages: five of the nine communities will close on or before Sept. 30, with the remaining four closing shortly after the debt assumption process is complete in the fourth quarter of 2017, subject to customary closing conditions.

“This acquisition represents another key milestone for IRT, bolstering our current portfolio with a collection of high-quality communities located in amenity-rich, non-gateway markets that are core to our investment thesis,” said Scott Schaeffer, chairman and CEO of IRT, in a news release. “This is a tremendous opportunity to increase our economies of scale and drive margin-enhancing operational efficiencies. Additionally, we have identified value-add projects across the acquired communities that will enable us to replicate our proven redevelopment playbook, drive rent growth, and ultimately deliver outsized returns on our investment.”

The transaction is expected to close in two stages: five of the nine communities will close on or before Sept. 30, 2017, with the remaining four communities closing shortly after the debt assumption process is complete in the fourth quarter of 2017, subject to customary closing conditions.

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