A new nontraded multifamily REIT was born this week as part of a $617M recapitalization of more than 60 properties, including an under-construction apartment tower in Manhattan.
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Charlotte-based Grubb Properties consolidated several legacy funds into Link Apartments REIT, a newly formed managed REIT with more than 5,600 apartments in its portfolio.
The rollup of high net worth funds and rebranding to create the single entity occurred as Grubb also secured a $240M credit facility for the new REIT and its Link Apartments Opportunity Zone REIT, which was formed a few years ago and isn’t part of the consolidation.
Grubb also secured a $300M senior construction loan from Maxim Capital Group and a $77M mezzanine loan co-originated by GreenBarn Investment Group, Skylight Real Estate Partners, Axonic Capital and Meadow Partners that fully capitalizes its Manhattan multifamily project called 8 Carlisle.
“The REIT was created partially to have a vehicle with a bigger balance sheet that's going to allow us to get bigger financing. But at the same time, it was also a move towards simplicity and efficiency,” Emily Ethridge, a spokesperson for Grubb, said in an interview Tuesday morning.
Grubb values the new 45-property REIT at roughly $1.9B. It includes 8 Carlisle, a 64-story tower with 462 apartments that is set to top off construction this month, Ethridge said. The OZ REIT, which was also created through the merger of several funds a few years ago, has a 17-property portfolio, and fewer than 10 of Grubb’s other assets are still individually owned outside either entity, Ethridge said.
The fund isn’t open for new investment, and there are no plans to pursue a public listing, she said.
Grubb collectively secured the $617M in financing across the portfolio recapitalization with help from several teams at JLL, according to a release from the global brokerage.
“By coordinating our M&A, Corporate Banking and Debt & Equity advisory expertise, JLL was able to sequence the series of transactions appropriately to ensure a seamless structure,” JLL Managing Director Stephen Van Leer said in a statement.
Grubb’s refinancing move comes as the multifamily sector broadly emerges from a supply-driven malaise, with second-quarter apartment absorption hitting 124,600 units, among the highest in 25 years, and helping to push vacancy lower.
A slowdown in new housing construction adds another tailwind to the back of multifamily developers. But the sector is also facing a demographic challenge, with the pace of U.S. population growth rapidly declining as President Donald Trump cracks down on illegal immigration.
UPDATE, JULY 22, 10:23 A.M. ET: This story has been updated to clarify what assets are covered under the new $240M credit facility.
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