Crescent Communities is selling nine apartment complexes across the Southeast, including major projects in Dilworth and SouthPark, as part of a $700 million transaction said to be one of the largest multifamily real estate deals of the year.
Charlotte-based Crescent will sell the 296-unit Crescent Dilworth project, still under construction off East Morehead Street near the Little Sugar Creek Greenway, and the 321-unit Crescent SouthPark complex, under construction near SouthPark Mall.
The sales will happen after both communities are completed next year. Both will retain the Crescent branding.
Crescent officials said they are selling the Charlotte communities as part of a nine-transaction agreement with a fund advised by UBS Global Asset Management and an unidentified private institutional buyer. The sales, which were agreed to before construction, cover a portfolio of 2,667 units at a gross purchase price approaching $700 million.
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The deal is among the largest in the country this year for pre-stabilized – that is, uncompleted and unoccupied – rental property, said Brian Natwick, president of Crescent’s multifamily division.
Crescent SouthPark will be sold to UBS, while Crescent Dilworth will be sold to the unidentified buyer, he said.
The first sale, of a 367-unit rental community in downtown Tampa, Fla., was for $111.5 million, Crescent announced Wednesday. That sale, which closed at the completion of construction, brought prices above $300,000 per apartment unit – well above the previous high-water sales price for rental units in Tampa, the company said.
“Our ability to transact this multifamily portfolio at these values, even prior to the completion of leasing, speaks to the strength of our strategy and the long-term value the market sees in our communities,” said CEO Todd Mansfield.
The deal offers the latest evidence of a muscular marketplace for rental properties, and for investments in them.
Apartment construction has surged in Charlotte in the wake of the recession as tighter lending standards made home ownership harder to achieve. Bank financing has flowed freely for rental units as a growing number of young, apartment-loving millennials reach adulthood.
Research earlier this year from the Real Data research firm showed apartment construction reaching an all-time high in Charlotte, with more than 10,000 units under construction during one six-month span and more than 11,000 more proposed.
Skeptics, including some developers of for-sale properties, have questioned whether too many apartments are going up, perhaps putting the city at risk of an “apartment bubble” bursting in coming years.
Crescent officials said they expect sales in Durham, Raleigh, Atlanta and Orlando will follow the Tampa transaction. The company has 4,000 units under construction, and 5,000 more in early stages of development.
Natwick said Crescent has five other apartment communities under development aside from the nine sold under the UBS deal. He said blue-chip investors such as UBS are looking for top-quality projects, and Crescent’s focus on building strong communities in high-growth areas of the Southeast, Mid-Atlantic and increasingly the Southwest is proving attractive to buyers.
He said the sale of the portfolio will help fuel further expansion.
“We are going to be active in twice as many markets as we were in the first round of investment,” he said. “Our footprint has now grown into Colorado, Arizona and Texas. … (The UBS sale) is not the end. It’s very much just the beginning.”