Philadelphia-based Berwind Property Group Ltd. has bought 17 apartment communities from DEC Investment Group, L.P. for roughly $241 million. The 5,037-unit portfolio is scattered across metropolitan areas in Arizona, Colorado, Kansas, Missouri, Arkansas and Texas.
Madison Apartment Group Inc., BPG's multifamily affiliate, will operate the portfolio. When the final phase the transaction is completed in mid-June, Madison will have doubled its multifamily holdings to more than 18,000 units.
"Completion of this latest acquisition was challenging on many fronts," says Joseph Mullen, president of Madison Apartment Group. "With 17 properties located in various cities, we had to mobilize our staff to perform due diligence within a limited time period."
Adding to the challenge, says Mullen, was a hodgepodge of debt placements. "We placed new debt on four properties, assumed conventional debt on 10 properties with various lenders, and assumed tax-exempt bond financing on three properties, all while completing our due diligence."
Mullen acknowledges that the strength of these markets are right now undermined by an oversupply of apartments and little job growth — but insists these factors weren’t ignored by the buyer. "These conditions were factored into the underwriting of the portfolio, and we believe long term that these markets will experience a rebound, making this a sound long-term investment."
BPG’s multifamily investments began with mid-Atlantic states. But in late 2000, BPG widened its focus to include Southeast assets. In 2001, BPG bought a multifamily portfolio of 12 properties for $136 million. The company has continued to grow since then with the acquisition of single assets throughout the nation.
With the acquisition of this new portfolio, BPG now has a 20-state multifamily presence.
"This most recent acquisition was purchased on behalf of BPG's Investment Partnership VI L.P., a fully discretionary fund started nearly a year ago, with total equity commitments of $384 million. Investors include public and corporate pension plans, endowments, foundations, financial institutions and high net worth individuals," says Arthur Pasquarella, COO of Berwind Property Group,