Brookhaven Apartments Sell For More Than $140M
A West Coast commercial real estate firm is beefing up its Atlanta multifamily portfolio.
Los Angeles-based CGI+ Real Estate Strategies acquired the apartment communities The Mille Brookhaven and TwentyNine24 Brookhaven, both at the corner of Clairmont Road and Interstate 85.
FPA Multifamily sold the neighboring properties to CGI+ for $144.75M, or more than $203K per unit, according to a press release. Berkadia Managing Director Russ Hardy brokered the sale.
The acquisitions are part of an effort by CGI+ to buy more than $1B in commercial real estate throughout the Southeast over the next 24 months.
“We're now looking to make a bigger push with this acquisition,” CGI+ Managing Partner Mark Cohen said in an interview.
CGI+ has owned other apartments in Metro Atlanta over the years, starting in 2011 when it purchased City Walk Apartments in Downtown Atlanta out of foreclosure, Cohen said. The firm sold that property in 2017 for more than $23M, according to the Fulton County Board of Assessors. CGI+ currently owns The Villas on Briarcliff.
Atlanta's demographic trends, relatively low taxes and the growing number of businesses moving all make its apartment market appealing to the firm, Cohen said. Atlanta's population is expected to grow twice as fast as the country, with the prime apartment renting age group — ages 20 to 34 — jumping 1.1%, according to a Fannie Mae report from earlier this year.
Investors have been hungry for Metro Atlanta apartment properties since the middle of last year, with asking prices rising 12% as of the first quarter of this year to $136,500 per unit, according to Marcus & Millichap. Investors purchased $6B in apartments in Metro Atlanta during the second quarter, according to CBRE research reported by GlobeSt. CBRE is projecting that $148B of apartments will trade hands this year in the U.S., a 33% jump from last year.
The demand for multifamily has heated up the local buyers market, Cohen said. CGI+ made an off-market purchase of both properties, a more ideal situation than competing with competitors, Cohen said. The competition to buy widely marketed properties is pushing up asset pricing.
“The competition is fierce. It's always been fierce and it continually finds a way to get more fierce,” he said “I thought it was fierce four years ago, but now looks back and say, 'Oh, that was great.'”
The Mille and TwentyNine24 are less than 10 miles from Scottish Rite Children's Hospital and Emory University Hospital, and housing demand from medical staff make them a good bet for the firm on future rent growth, Cohen said. With both properties more than 95% leased at the time of purchase, CGI+ is projecting rents will rise up to 4% per year over the next few years, Cohen said.
“We believe that's probably a conservative value given recent rent growth is much higher than that,” he said.
Metro Atlanta rents rose more than 12% year-over-year as of August, according to Apartment List's Atlanta Rent Report.
“We believe in the rent growth story on Atlanta as a whole,” Cohen said. “We actually, I think, made a pretty opportunistic purchase.”