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Blackstone Scores Big With a Capital B

Steadfast Income REIT Pays $103 Million for Class B Jefferson at Perimeter Complex in Dunwoody
June 18, 2018
Investor appetite for older, Class B apartments in Atlanta's suburbs continues to grow, with the latest exhibit coming from a California REIT that paid more than $100 million for a suburban Atlanta community.

Steadfast Income REIT of Irvine, CA, acquired Jefferson at Perimeter, a 504-unit, 22-year-old Class B apartment community in Dunwoody, GA. The seller was Blackstone Group, which acquired the asset in December 2015 as part of a two-building portfolio.

Based on overall sales price, Steadfast's acquisition ranks as the largest multifamily sale in metro Atlanta in 2018. The second largest is 32Hundred Lenox, a 431-unit, Class B complex built in 1961. Torchlight Investors and Wilkinson Corp. bought 32Hundred Lenox in the Buckhead submarket for $72.5 million in May.

Investors have been swarming to older Class B apartments in Atlanta's suburbs as chronicled recently by CoStar News. The average age of the Top 5 multifamily sales so far in 2018 is 27 years.

Suburban Class B apartments have become an investment darling because they offer solid returns as rents increase, plus generally high occupancy rates. By investing $5,000 to $10,000 per unit, buyers can upgrade older properties and reap nice returns when they sell, CBRE Vice President Kevin Geiger said.

That's precisely what Steadfast plans at Jefferson at Perimeter.

When Steadfast closed on Jefferson at Perimeter, it entered into an agreement with an affiliate, Pacific Coast Land & Construction Inc., to provide construction services "with respect to capital improvements and revitalization to be undertaken from time to time at the Jefferson Property," Steadfast said in the Securities and Exchange Commission (SEC) document in which it announced the acquisition.

Steadfast financed its $102.8 million acquisition with a combination of cash proceeds from other property sales as part of a tax-deferred 1031 exchange and a $65 million loan from Fannie Mae, according to the SEC filing.

Constructed in 1996, Jefferson at Perimeter comprises 12 three- and four-story buildings on 25 acres at Ashford Dunwoody Road and Ashford Center Parkway near Atlanta's Interstate I-285 Perimeter.

The apartment community was 94.8 percent occupied as of June 5.

For more information on Steadfast's acquisition of Jefferson at Perimeter, please see CoStar COMP #4293734.

Tony Wilbert, Atlanta Market Reporter  CoStar Group   
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