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August 6, 2008

Praedium, Audubon Acquire 938-Unit Atlanta M-F Portfolio

The Praedium Group and Audubon Communities Management have teamed up to buy a seven-property multi-family portfolio in the Atlanta metro region for approximately $45 million. The seller was not identified. It is the third joint venture acquisition made by Praedium, a New York City-based national real estate investment firm, and Audubon, an owner and operator of multi-family assets in the Northeast and Gulf South regions of the United States. Information on the other JVs was not available. The 938-unit portfolio comprises 156 buildings constructed between 1972 and 1999 located in Fulton, Henry, DeKalb, Rockdale, Gwinnett and Hall counties. The portfolio consists of one-, two- and three-bedroom units with an average size of 1,041 square feet. “These assets have underperformed due to a lack of capital, however we believe they are well situated within their individual submarkets and benefit from their proximity to highways, Hartsfield-Jackson International Airport, area hospitals and medical centers and numerous other employment generators in the Atlanta metropolitan area,” Mark Lippmann, director & head of Praedium’s southern region, said in a news release. “Solid demographic fundamentals make Atlanta an especially attractive target market for investment.” Other investors apparently agree. Several multi-family properties in the Atlanta area have changed hands this summer. CPN reported July 3 that Grubb & Ellis Apartment REIT Inc. had acquired two Class A apartment communities in metro Atlanta with nearly 500 units from two sellers. The REIT bought the 216-unit AMLI at Kedron Village community in Peachtree City, Ga., from AMLI Residential and Prudential Real Estate Investors for approximately $26.9 million. In another sale, the 280-unit Creekside Crossing in Lithonia, Ga., was purchased from Harbor Group International for $25.4 million. Elliott Hollander, director of the national multi-housing group at Marcus & Millichap Real Estate Investment Group, told CPN at the time that the high residential mortgage foreclosure rate in Atlanta was helping the multi-family market. He said Class A apartment properties in the region had seen “very little slowdown” and little compression of cap rates. Two other area acquisitions tracked recently by CPN include 3100 River Exchange, a 222-unit multi-family community in Sandy Springs, Ga., that Grubb & Ellis Investors L.L.C. bought from AMLI Residential on behalf of tenant-in-common investors for an undisclosed amount, and Villas at South Point Apartments in Atlanta, a 284-unit complex purchased by Silver-McCann Apartment Group II L.P. for an undisclosed amount. Praedium said this latest acquisition fits in with the firm’s ongoing investment strategy of focusing on value-added real estate and improving them through leasing and management. More than half of the company’s investments are in multi-family, according to Praedium’s website. The firm currently owns about 55,100 multi-family units. It also has about 32 percent holdings in office properties and some retail, mixed-use and industrial investments. Praedium said it is taking advantage of the “current dislocation in the commercial mortgage market” and seeking out debt opportunities as well. The company is investing its most recent fund, The Praedium Fund VII, L.P., a $900 million private equity fund which can acquire up to $3 billion in assets. The fund is targeting mid-cap assets in the United States and Canada in the $10 million to $70 million range.

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