San Diego, CA – October 10, 2016 – CBRE Capital Markets has arranged the sale of the Southeast Residential Portfolio (SERP), a 24-property multifamily portfolio, to San Diego-based Strata Equity Group, Inc. for more than $720 million from an affiliate of New York-based DRA Advisors, LLC. The SERP acquisition is among the largest multifamily transactions in 2016.
CBRE Capital Markets’ Debt & Structured Finance team secured approximately $500 million of financing on behalf of Strata Equity Group for the acquisition of the portfolio.
The SERP portfolio consists of 6,294 units in suburban locations throughout 13 metro areas in the southeast region of the United States. The properties span four states: Georgia, North Carolina, Tennessee, and South Carolina.
“We are in a favorable market for sellers and buyers to transact in volume. For assets with a consistent and compelling investment thesis, sellers can achieve attractive pricing with less friction. At the same time, the scale of portfolios allows buyers to make strategic, transformative moves,” said Malcolm McComb, Vice Chairman, Institutional Properties, CBRE, who led the transaction for the seller.
“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,” said David Michan, President of Strata Equity Group. “We believe the long-term fundamentals of the apartment sector, particularly Class B product, remain healthy; our investment in SERP reinforces that belief,” added Scott Wittman, Strata’s Director of Investments.
Bill Chiles, Scott Peterson and Brian Cruz of CBRE’s San Diego office and Robert LaChapelle of CBRE’s Atlanta office secured the aggressively priced loans for the portfolio. Strata Equity Group diversified the loan terms to match each individual asset and will be financing the portfolio with a mixture of seven- and ten-year fixed and floating rate loans provided by Freddie Mac.
“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,” said Mr. Chiles.
The properties range in age from 1985 to 2000, with an average year built of 1996. The mix of the assets is diversified with 72 percent of the units being two and three-bedroom floor plans and a larger-than-average unit size of approximately 1,100 square feet. The portfolio offers proven performance with a long track record of rising rents and consistent occupancy. Over the last three years, net rental income has increased 12.2 percent while averaging 95.3 percent occupancy.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
About Strata Equity Group, Inc.
Strata Equity Group, led by Carlos D. Michan (CEO) and David C. Michan, is a San Diego, CA-based family-owned real estate investment and management company founded by Carlos and his two brothers. With over 30 years of operating history, Strata operates two investment divisions: acquiring, repositioning, and operating commercial income properties with an emphasis on multi-family; and acquiring and entitling raw land throughout Southern California. Strata currently owns and manages over $2.2 billion in real estate assets comprised of more than 16,000 multi-family units, 275,000 square feet of commercial space and 17,000 acres of land.
