AvalonBay Communities plans to double the size of its Texas portfolio with the purchase of half a dozen suburban garden communities in Dallas-Fort Worth and a pair in Austin.
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With an average rent of $1,675 per month, the newly purchased multifamily communities will offer more affordable rents than the REIT’s current and planned developments in Texas, according to a release from the company.
“This transaction will double the size of our portfolio in our Texas Expansion Regions at a time when assets can be acquired at a compelling basis relative to today’s construction costs, with assets that are strongly aligned with our portfolio allocation priorities,” AvalonBay Chief Investment Officer Matthew Birenbaum said in a statement.
The six multifamily developments in DFW range in age from 4 years to 30 years, while the two Austin multifamily developments were built in 2015 and 2017, leading to an overall average age of 11 years for the assets.
The sale of the Dallas portfolio by BSR Real Estate Investment Trust is slated to close in Q2 for an aggregate purchase price of $431.5M. That will be divided up as $193M in cash and the issuance of $238.5M of DownREIT units, which represent limited partnership interests in AvalonBay’s AVB DownREIT.
The DFW assets are:
The 216-unit Auberry at Twin Creeks, built in 2005 in Allen.
The 330-unit Satori Frisco, built in 2019 in Frisco.
The 349-unit Vale Frisco, built in 2021 in Frisco.
The 301-unit Aura Benbrook, built in 2020 in Benbrook.
The 276-unit Lakeway Castle Hills, built in 2019 in Lewisville.
The 372-unit Wimberly, built in 1995 in Dallas.
BSR's sale of the Austin properties is anticipated to close around the end of March for an aggregate purchase price of $187M in cash. The Austin communities are the 554-unit Cielo, built in 2015, and the 303-unit Retreat at Wolf Ranch, built in 2017 in Georgetown.
AvalonBay officials projected the weighted average initial market cap rate will be in the high 4% range.
Wachtell, Lipton, Rosen & Katz, Davies Ward Phillips & Vineberg LLP and Goulston & Storrs PC served as legal counsel to AvalonBay in the deals.
Sun Belt properties like these continue to be an attractive asset to multifamily REITs, and AvalonBay made two additional acquisitions last quarter. The firm spent $185.5M on a 126-unit townhome community in Austin and a 347-unit apartment building in Denver.
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