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Strata Equity Group Buys $720 Million Southeast Multifamily Portfolio

CBRE Arranges Sale of 24-Property Portfolio for Affiliate of New York-based DRA Advisors
October 13, 2016
In one of the largest multifamily transactions to close so far in 2016, San Diego-based Strata Equity Group acquired the 24-property Southeast Residential Portfolio (SERP) from an affiliate of DRA Advisors LLC for more than $720 million.

The portfolio consists of 6,294 suburban apartment units in 13 metro areas within Georgia, North Carolina, Tennessee and South Carolina. The properties were built between 1985 and 2000, with an average age of 20 years. The mix of assets includes 72% of units being two and three-bedroom floor plans and a larger-than-average unit size of approximately 1,100 square feet. Over the last three years, the portfolio's net rental income has increased 12.2% while averaging 95.3% occupancy.?

"This portfolio affords us with a truly unique opportunity to scale our platform while also securing a very attractive, risk-adjusted return for our investors," said David Michan, president of Strata Equity Group, in a statement announcing the transaction.

"We believe the long-term fundamentals of the apartment sector, particularly Class B product, remain healthy," added Scott Wittman, Strata’s director of investments.

Last year, Strata acquired a 12-property multifamily portfolio in partnership with a private Mexican investor group from Blackstone Real Estate Partners VII that consisted of more than 4,600 apartment units located in Atlanta, Austin, Denver and Houston.

CBRE Capital Markets’ Debt & Structured Finance team arranged the latest portfolio sale and also secured approximately $500 million of financing for the buyer. Bill Chiles of CBRE’s San Diego office and Robert LaChapelle of CBRE’s Atlanta office obtained the loans, which have different terms to match each individual asset. Strata is planning to refinance the portfolio with a mixture of seven- and ten-year fixed and floating rate loans provided by Freddie Mac.

"We are in a favorable market for sellers and buyers to transact in volume. For assets with a consistent and compelling investment thesis, sellers can achieve attractive pricing with less friction," noted Malcolm McComb, vice chairman of institutional properties at CBRE, who led the transaction on behalf of New York-based DRA.

Additional information on this transaction is available in CoStar Sale Comp #3719884.


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