Real Estate - Residential

Firm To Convert Student Housing; Area Racks Up More Apartment Sales

By Cece Nunn, posted Jan 25, 2022
An investment firm plans to convert apartment complexes Camden Forest (shown above) and Wilshire Landing in Wilmington into conventional multifamily housing. (Photo by Cece Nunn)
A New Jersey-based company plans to convert student housing into traditional apartments in Wilmington after buying two apartment communities at the end of December.

Lucern Capital Partners (LCP), a private equity real estate investment firm, purchased Wilshire Landing and Camden Forest, complexes close to the University of North Carolina Wilmington, in December. The firm paid about $19.5 million for Wilshire Landing, 4013 Wilshire Blvd., and a little over $21 million for Camden Forest, 205 Cedar Branch Lane, according to property tax records.

The seller, Preiss Company, purchased the properties for $29 million in 2013, records show.

The apartment complexes hold a total of 200 units, all of which will be converted to conventional housing.

“The bed/bath parity and large unit layouts and townhome floor plans make for attractive conventional housing options,” said Frank Forte, managing partner and chief investment officer of LCP, in an email Tuesday. 

While the need for more student housing has been on the rise in recent years in Wilmington as UNCW continues to grow, Forte said, “Conventional housing demand far exceeds student demand.”

He said the conversion of Wilshire Landing and Camden Forest will come with modern upgrades to units, including cabinetry, appliance packages, flooring, lighting and bathrooms, along with amenity upgrades.

Asked what drew the firm to Wilmington, Forte replied, “The diverse employment base and growing population density among the upwardly mobile millennial demographic is what is most attractive.”

LCP highlighted the Wilmington transactions in an announcement Tuesday about the final closing of its Lucern Multifamily Value Fund I. 

“With $23M of equity commitments from a diverse group of current and new investors, the fund makes opportunistic investments in multifamily and mixed-use assets that would benefit from strategic value-add initiatives,” a news release stated.

David Hansel, managing partner at LCP, said in the release, "The successful close of our first fund highlights investor commitment to our disciplined investment strategy, and we are grateful for the trust our clients have placed in us. As investors, we seek to generate outsized returns for our limited partners and believe fostering lasting relationships is equally important."

New owner for Uncommon Wilmington

A Singapore-based real estate investment trust also recently bought apartments in Wilmington as part of a $213 million student housing acquisition in three U.S. states. 

Ascott Residence Trust (ART) purchased Uncommon Wilmington, 2421 Playa Way off South Kerr Avenue, from DRI/CA Wilmington LLC in a $54 million transaction, according to a deed.

ART purchased another North Carolina complex, Latitude on Hillsborough, along with The Link University City in Pennsylvania and Latitude at Kent in Ohio.

The four apartment communities have a total of 1,651 beds, in markets that include more than 100,000 students across five universities, according to an ART news release.

“The acquisition will be 92% funded by debt and 8% funded by the remaining proceeds from ART’s private placement launched in September 2021,” the December release stated.

Completed in 2020, Uncommon Wilmington replaced an old strip center and includes 120 apartment units and 30 townhomes with a total of 493 beds.

The complex is 94% leased, according to ART. 

“Demand is expected to remain healthy in the next few years, given the continued growth in enrollment at UNCW and limited upcoming supply of private student accommodation assets,” the release stated.

Waterleaf at Leland changes hands

In other apartment sale news this year, commercial real estate firms Goodegg Investments and Mesos Capital recently announced the joint acquisition of Waterleaf at Leland, a 248-unit class-A apartment community in Leland. 

According to a news release, the teams are led by Julie Lam and Annie Dickerson at Goodegg Investments, which is based in San Francisco, and Pancham Gupta and Rajan Gupta at Mesos Capital, a firm based in Jericho, New York.

“​​We continue to see strong performance across our assets in both North Carolina and South Carolina, including in Leland and the greater Wilmington MSA – performance driven by strong population growth, job growth, job diversity and superior quality of life," the investment leads stated in the release. "With the incredibly strong growth we're seeing in Leland and Wilmington as a whole, we are confident we can optimize this asset and provide quality living for the residents, all while Leland continues to grow and thrive."

The sale price was not disclosed in the release but a deed indicated the buyer paid at least $66.5 million for the property to seller Graycliff Capital Partners.

Graycliff started construction of Waterleaf in 2020.
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