Atlanta Multifamily Group With Crow, Carlyle Backing Going Shopping
Penler is done waiting for its moment.
The 6-year-old multifamily housing firm has acquired two apartment complexes in Metro Atlanta in the past six months: Trace Midtown, a 290-unit complex off Peachtree Street, and Eleven85, a 288-unit garden-style apartment complex off Collier Road.
It also recently purchased a 320-unit apartment complex in Sarasota, Florida. The Atlanta-based firm is targeting $600M in Southeast apartment purchases and development in 2026.
With the recent buying spree, the firm’s total managed assets are approaching $1B, Penler Managing Partners Graham Carpenter and Brian Metzler told Bisnow.
Some big-named institutional investors are backing Penler. These include Carlyle Group, Amsterdam-based Rubens Capital Partners B.V. and LaSalle Property Fund, according to Carpenter. Most recently, the firm also secured an investment from Crow Holdings.
Penler has been seeking the right time to buy institutional-grade apartments in the Southeast at a discount to replacement cost, and it believes that time is now. A wave of robust apartment construction, fueled in part by low interest rates offered during the coronavirus pandemic, has softened rents in metro Atlanta. Since then, interest rates have risen, and developers are having trouble making deals pencil when refinancing.
Some lenders are forcing borrowers to sell assets at a discount.
“We think prices have bottomed,” Carpenter said. “We've seen rents and operations stabilize as supply pipelines start to become fully absorbed. That, to us, is a signal that we're firmly at a trough.”
Penler is acquiring apartments for less than they were purchased a few years ago. For example, the firm picked up Eleven85 Apartments for $67M from TerraCap Management earlier this month, according to records in the Georgia Superior Court Clerks' Cooperative Authority database. TerraCap purchased the complex in 2022 for $90.9M, according to data collected in the Reonomy database.
Penler’s current portfolio is made up of 10 multifamily properties in the Southeast, including Reserve Decatur, which it bought last year for $80M, a $20M price drop from what Blackstone paid for the property in 2021. Penler also owns The Tomlin in Downtown Snellville, which it bought last year for $77.5M.
Carpenter said the firm is acquiring properties with debt leverage in the 60% range, which is above the current cap rate. It’s a gamble Penler is willing to make as the firm sees demand only increasing for housing in the Southeast.
“We're not buying these assets for current cash flow. We're buying them, really, based on the discount to replacement cost thesis, as well as … that we believe in these locations,” Carpenter said. “We will be insulated for some time from new supply, and feel like as rent growth returns and capital flows come back to more normalized levels, we'll be able to exit them profitably in the medium-term horizons.”
Metzler said the firm is planning to spend another $125M in equity for four planned acquisitions in the next year, as well as another $125M on four apartment developments. The firm’s development pipeline was quiet in 2023 and 2024, mirroring the cycle of limited new apartment construction in many parts of the U.S. In 2025, however, Penler broke ground on a 294-unit garden-style complex in Lakewood Ranch, Florida, and will launch another 262-unit complex in Clermont, Florida.
While Penler focuses on acquiring apartments in urban infill markets, the firm’s development focus is on affluent Southeastern suburbs. Metzler said Penler is targeting a few markets for development in Metro Atlanta, but declined to identify them.
“It's very hard to make sense of development right now throughout the Southeast, and Atlanta is no exception. But we think there are certain pockets, particularly suburban pockets, where … it's less expensive to build,” he said.
Demand for apartments in the Atlanta area remained strong in the second quarter, with 5,800 units absorbed by renters. Q2 marked the eleventh consecutive quarter of positive absorption, according to Cushman & Wakefield. At the same time, developers delivered far fewer new apartments in the area. Developers added 4,100 new units to the rental market last quarter, a drop of nearly 21% since Q1, according to Cushman & Wakefield.
