Associated Estates To Acquire 1,606-unit Portfolio For $324 Million
Seven Class-A Apartment Properties in the Southeast and Mid-Atlantic
Purchases To Be Funded From Property Sales
CLEVELAND, Sept. 23, 2013
CLEVELAND, Sept. 23, 2013 /PRNewswire/ --Associated Estates Realty
Corporation (NYSE, NASDAQ: AEC) today announced it has entered into a
definitive purchase agreement and completed due diligence with respect to a
seven-asset portfolio of Class-A apartment communities located in the
Southeast and Mid-Atlantic (the "Portfolio"). The 1,606-unit Portfolio is
comprised of 462 stabilized units, 349 units currently in lease-up and 795
units being constructed by the current owner that will be sold to the Company
upon their completion. The Portfolio is located in high growth submarkets in
the Raleigh-Durham, Charlotte, Atlanta and Tampa markets.
A list of the properties being acquired, along with estimated transaction
closing dates, is as follows:
Property Location Year Built Closing
St. Mary's Square Raleigh, NC 2013 Q4 2013
Lofts at Weston Cary, NC 2013 Q4 2013
The Apartments at Blakeney Charlotte, NC 2008 Q4 2013
Alpha Mill Phase I Charlotte, NC 2007 Q1 2014
Alpha Mill Phase II Charlotte, NC 2014 Q1 2014
Perimeter Town Center Atlanta, GA 2014 Q4 2014
Varela Tampa, FL 2014 Q4 2014
The Portfolio has an aggregate purchase price of approximately $324 million,
resulting in a blended nominal cap rate of 5.5% on year one stabilized net
operating income. Six assets will be acquired free and clear of debt, while
The Apartments at Blakeney acquisition will include the assumption of a $28
million loan. The Portfolio has an average year built of 2012.
The Company intends to fund the purchase of the Portfolio principally from the
proceeds of property dispositions over the next twelve months. The
contemplated dispositions are primarily located in the Southeast and
Mid-Atlantic. Among the dispositions that will fund the Portfolio purchase
are five assets with secured debt that is being repaid on October 1, 2013.
These five assets have an average age of 23 years and were purchased in 1998
for a total of $99 million. Proceeds from these asset sales are expected to
be in the range of $230 to $240 million. These sales would result in a
blended, unlevered IRR in excess of 13%.
"This Portfolio acquisition is consistent with our plans to continue to grow
younger in markets with strong household formations and high paying jobs. The
expected pricing for the properties we plan to sell, once again, demonstrates
our ability to create significant value from buying, developing and managing
apartment communities. These new acquisitions should position Associated
Estates to continue to deliver sector leading same community NOI growth over a
long period of time," said Jeffrey I. Friedman, President and CEO.
Raleigh-Durham -- Two Properties with 349 Total Units:
St. Mary's Square -- Raleigh, NC -- Anticipated closing Q4 2013
St. Mary's Square, built in 2013 and containing 134 units in a four-story,
midrise building with podium parking, is located in the Glenwood South
submarket of downtown Raleigh, NC. The property is currently in lease-up, and
is scheduled to reach 95% occupancy in November 2013.
Glenwood South is the focal point of the new, urban downtown Raleigh, with
shops, restaurants and nightlife all within a few blocks of St. Mary's
Square. In addition, Raleigh's downtown has evolved into a hub of culture and
entertainment for the Research Triangle region. Nearly 40,000 people are
employed downtown in the academic, government and private sectors.
Lofts at Weston -- Cary, NC -- Anticipated closing Q4 2013
The Lofts at Weston, built in 2013 and containing 215 units in a four-story,
midrise building with surface parking, is located in the Weston submarket of
Cary, NC. The property is currently in lease-up, and is scheduled to reach
95% occupancy in December 2013.
The Lofts at Weston is located approximately one mile west of the SAS
Institute's international headquarters. SAS is the world's largest private
software firm and Cary's largest employer with over 4,800 employees. The
property is also within a mile of the 1.4 million square foot Weston Business
Park, a 25-acre mixed-use development.
St. Mary's Square and the Lofts at Weston offer an easy commute to the
world-renowned Research Triangle Park, the area's most significant employment
center, comprised of nearly 175 companies with approximately 40,000
With the addition of these two properties, the Company will own five Class-A
properties, containing a total of 1,109 units, in the Raleigh-Durham market.
Charlotte -- Three Properties with 562 Total Units:
The Apartments at Blakeney -- Charlotte, NC -- Anticipated closing Q4 2013
The Apartments at Blakeney, built in 2008 and containing 295 units in
garden-style buildings with surface parking, is located approximately three
miles south of Ballantyne Resort and the 535-acre Ballantyne Office Park,
which contains over 4 million square feet of Class-A office space.
Alpha Mill Phases I and II -- Charlotte, NC -- Anticipated closing Q1 2014
Alpha Mill Phase I, built in 2007 and containing 167 units in a mid-rise,
adaptive re-use project with surface parking, was converted from a historic
cotton mill and incorporates many of the architectural details from the
original buildings. Alpha Mill Phase II, currently under construction with an
expected completion in Q1 2014, will consist of an additional 100 units in a
new, four-story midrise building with surface parking.
Alpha Mill Phase I and II are located within a short walk from downtown
Charlotte and over 22 million square feet of Class-A office space in the
immediate area. An extension of the 'Lynx Blue Line' light rail system is
expected to locate a new station immediately adjacent to the property within
the next few years, allowing rapid access to UNC Charlotte, South End and
Atlanta -- One Property with 345 units:
Perimeter Town Center -- Atlanta, GA -- Anticipated closing Q4 2014
Perimeter Town Center, currently under construction with an expected
completionin Q4 2014, will contain 345 units in a five-story, mid-rise
building with structured parking.
The property is located within the Perimeter Center submarket of Atlanta, with
over 28 million square feet of office space, 4,000 businesses and 100,000
employees. The property is also in close proximity to Atlanta's premier
hospital facilities, three MARTA rail stations and numerous upscale retail
With the addition of this property, the Company will own three properties,
containing a total of 699 units, in the Atlanta market.
Tampa -- One Property with 350 units:
Varela -- Tampa, FL -- Anticipated closing Q4 2014
Varela, currently under construction with an expected completion in Q4 2014,
will contain 350 units in a four-story, mid-rise building with structured
Varela is located within the Westshore submarket of Tampa, FL. Westshore is a
principal business district of Tampa, with more than 11 million square feet of
office space and 4,000 businesses with nearly 100,000 employees. Westshore is
also home to 32 hotels, two major upscale shopping malls and approximately 200
restaurants. Additionally, Varela is located less than a mile from Tampa
Perimeter Town Center and Varela will be acquired by the Company once
construction is complete and the final certificates of occupancy are
obtained. The Company will perform all leasing and management services for
the properties during the lease-up phase.
Associated Estates is a real estate investment trust ("REIT") and is a member
of the S&P 600, Russell 2000 and the MSCI US REIT Indices. The Company is
headquartered in Richmond Heights, Ohio. Associated Estates' portfolio
consists of 51 properties containing 13,171 units located in ten states. For
more information about the Company, please visit its website at
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: This news release contains forward-looking statements reflecting the
current plans and expectations of management, which management believes are
based on reasonable assumptions, but which are subject to certain risks,
uncertainties and other factors that could cause actual results to vary
materially from those indicated. Such factors include, but are not limited to,
the failure of development projects to achieve expected results due to, among
other causes, construction and contracting risks, unanticipated increases in
prices for materials and/or labor, and delays in project completion and/or
lease-up that result in increased costs and/or reduce the profitability of a
completed project; and the failure to enter into development joint venture
arrangements on acceptable terms. Additional information regarding these and
other risk factors that could cause results to materially differ from those
described in forward-looking statements can be found in our Annual Report on
Form 10-K for the year ended December 31, 2012. Accordingly, readers are
cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date of this news release. These forward-looking
statements are intended to be covered by the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.
For more information, please contact:
SOURCE Associated Estates Realty Corporation
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