JRK Property Holdings began what will be a busy month with the acquisition of Cadence at Crown, a 538-unit apartment complex in Gaithersburg, MD.
This month the Los Angeles-based firm is planning to make a series of acquisitions and dispositions, totaling nearly $1.6 billion. These transactions are expected to close by year-end.
From March into the summer, COVID caused a lot of uncertainty in the market, and the bid-ask spread had grown pretty wide. JRK’s internal data gave it the confidence to move when deals started coming to market.
“We manage our whole portfolio in-house, so we got comfortable pretty quickly with where the collection levels were,” James Broyer, president of the investment group at JRK Property Holdings, tells GlobeSt.com. “I think we were able to take advantage of the first wave of deals that we saw coming to market in June, July and August. We felt confident that we knew what we were looking for, and we were able to target resilient properties throughout the country during that period. We wrapped up due diligence on a lot of these in August, and now we’re closing.”
Cadence at Crown, built in 2014 and is 95% occupied, closed on October 1. It is the largest of five communities that JRK will close on in October. The other four communities—located in Tempe, Az., Denver, Col., Lexington Park, Md. and Baton Rouge, La.—range in size from 152 to 408 units and are collectively 96% occupied. The total cost for the five communities, which will be acquired in separate transactions from different sellers, will be $375 million.
“The recurring theme is that they all showed an incredible resilience and low delinquency throughout the pandemic,” Broyer says. “We didn’t step into any deals where we saw large double-digit delinquencies like we’ve seen in the marketplace. They all need varying degrees of physical renovations, whether it’s the common areas or the unit interiors. They all had some sort of operational upside that we felt we could improve upon with JRKs in-house management.”
JRK is acquiring these five apartment communities through its $800 million JRK Platform IV, which targets multifamily investments built after 1990, and its $330 million JRK MF Opportunities II, which targets assets constructed before 1990. With both funds less than 30% invested, JRK will continue to look for multifamily buying opportunities.
JRK also is selling a $1.2 billion portfolio of 13 multifamily communities located in California, Colorado, Florida, Georgia, North Carolina, Ohio and Texas. Each property, ranging in size from 64 to 709 apartment homes, is being marketed separately.
“These [dispositions] are tied to the life of the funds and the partnerships that they’re in,” Broyer says. “With the debt maturing and manageable prepayment penalties, we felt like it made sense to bring them to market at this point.”