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Starlight, BSR both expand U.S. multifamily portfolios

Two multifamily owners with Canadian connections have acquired four U.S. properties comprising 1,...

IMAGE: The La Vie Southpark apartments in Charlotte, N.C., is one of two U.S. properties acquired by a Starlight fund. (Google Maps)

The LaVie Southpark apartments in Charlotte, N.C., is one of two U.S. properties acquired by a Starlight fund. (Google Maps)

Two multifamily owners with Canadian connections have acquired four U.S. properties comprising 1,301 apartments for almost $315 million (all figures US).

The acquisitions represent two different strategies for Starlight’s U.S. Multifamily No. 1 Core Plus Fund (SCPO-UN-X), and for BSR REIT, which is traded on the TSX (HOM-UN-T) but based in Little Rock, Ark.

Toronto-based Starlight acquired The Bluffs at Highlands Ranch in metropolitan Denver, and LaVie Southpark in Charlotte, N.C., for $185.75 million. The Bluffs is a 340-suite garden-style class-A, core-plus multifamily property completed in 1994; LaVie is a 321-suite class-A, mid-rise multifamily property completed in 2015.

BSR REIT purchased the Vale Luxury Apartments in the Houston metropolitan statistical area, and Satori Frisco Apartments in the Dallas MSA for $129 million.

Vale is a newly constructed garden-style community of 350 apartment units in the lease-up phase. Satori Frisco is a garden-style community consisting of 330 apartment units built in 2019.

The Starlight acquisitions

“We are delighted to complete the purchase of two high-quality properties in The Bluffs at Highlands Ranch and LaVie Southpark which will further diversify the fund’s portfolio and present strong opportunities for growth in net operating income and value,” said fund president Evan Kirsh in the announcement.

“We are also pleased that the fund has now completed the deployment of its initial public offering proceeds, having assembled a geographically diversified portfolio of 2,219 multiresidential suites which the fund will continue to diligently asset manage to maximize returns for our unitholders.”

The Bluffs consists of 37, three storey walk-up buildings on a 21-acre site comprised of one-bedroom, two-bedroom and three-bedroom suites.

Amenities include a two-storey clubhouse, state-of-the-art fitness centre, media room, business centre, recreation room, racquetball court, sauna and dog wash station.

Outdoor features include a resort-style pool with spa and sundeck, outdoor fireplace and seating area, basketball court, tennis court, volleyball court, jogging trails, dog park and package lockers.

Starlight plans to further reposition The Bluffs with additional upgrades to suite finishes, common areas, amenity spaces and the property’s “curb appeal.”

Avenue5 Residential will become the property manager.

LaVie is a five-storey building on a 7.3-acre site comprised of studio, one-bedroom and two-bedroom suites.

Indoor amenities include a clubroom, chef-quality demonstration kitchen, two-storey fitness centre with yoga studio, pet spa and coffee bar. Outdoor amenities include a wooded dog park, nearby walking trails, a saltwater swimming pool, courtyard, outdoor kitchen and fireplace.

Starlight plans additional upgrades to suite finishes, common areas and amenity spaces.

RKW Residential will property manage LaVie.

Financing for the acquisitions includes a $122.6 million draw on Starlight’s No. 1’s existing credit facility (which has been expanded to $300 million); $36.2 million from the refinancing of its Autumn Vista Apartments property and a one-year $6.4 million loan from Daniel Drimmer, a unitholder and CEO of the fund.

The weighted average interest rate is 2.93 per cent.

The fund now owns and operates 2,219 rental units in seven class-A core-plus, income-producing apartment communities in Tampa; Atlanta; Nashville; Charlotte and Raleigh, N.C.; Austin, Texas; and Denver.

The BSR acquisitions

BSR has been acquiring and divesting apartments since its May 2018 IPO with an eye to recycling capital into newer properties in several target markets.

“The purchase of Vale and Satori Frisco is a clear example of our portfolio enhancement growth strategy and capital recycling program at work,” said John Bailey, BSR’s CEO, in its announcement.

“BSR recently exited the smaller Beaumont and Longview, Texas markets and also sold non-core properties in other markets.

“We are now using our strong liquidity position to invest in Vale and Satori Frisco, modern communities in core growth markets with the amenities our residents desire.”

Vale includes multiple amenities: a resort-style swimming pool, drive-through mail kiosk, fitness centre, dog park, car care centre and direct garage/ground floor entry for every apartment unit. It is 55.1 per cent leased.

Satori Frisco’s features include attached direct-access garages, a resort-style swimming pool, two-storey fitness centre, car care centre, dog park and a private access gate. It is 91.5 per cent leased.

The portfolio’s average age has decreased from 29 years to 16 years old.

The REIT’s 14 acquisitions following the IPO added 4,191 apartment units with a weighted average year built of 2013 compared to 32 dispositions totalling 6,399 apartment units with a weighted average year built of 1988.

Following the latest transactions, BSR’s debt-to-gross-book-value ratio is 46 per cent and its acquisition capacity is approximately $175 million.

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