CHARLOTTE, NC - Bluerock Residential Growth REIT announced that it will acquire a two-phase 473-unit Class A apartment community in Charlotte, NC, known as the Ashton Reserve Apartments in two stages. Located in the upscale Northlake submarket, this luxury community sits in close proximity to Charlotte's Uptown Central Business District and University Research Park.
Built in two phases in 2013 and 2015, Ashton Reserve features high-end one, two and three bedroom layouts. Ashton I consists of 322 existing units that average 993 square feet and with an effective in-place rent of $1,250 per month. Ashton II consists of 151 units, of which 71 have been delivered and 43 leased, that average 1,019 square feet.
BRG sourced the transaction through an existing operating partner, which had purchased Ashton with a capital provider in 2013. BRG has entered a purchase agreement for Ashton I and is replacing the capital provider at their original basis for Ashton I, and stepping into their contract at the closing of Ashton I to purchase Ashton II, enabling BRG to benefit from favorable pricing relative to the market. As a result, BRG is purchasing Ashton I at a cap rate of 6.0%, versus local market cap rates of approximately 5.25% - 5.50%, and Ashton II at a cap rate of 5.8%.
Ashton Reserve offers some of the most desirable and highest-end in-unit features available in the Northlake submarket. All units have nine foot ceilings and are equipped with a stainless steel appliance package that includes full-sized refrigerators, granite countertops, undermount sinks with high-end gooseneck faucets, and full size washer/dryers. Community amenities include lush landscaping, two clubhouses, fitness facilities, a swimming pool with oversized deck and grilling stations, as well as a business center and a private media center.
The Charlotte, NC market is currently sustaining strong population growth among the rental-oriented 20 year-old to 34 year-old demographic, and management believes that Ashton Reserve is well situated to take advantage of that growth. The Northlake submarket in which the project is located is approximately eight miles from Uptown Charlotte and is anchored by the one million square foot Northlake Mall, a premier retail destination for the affluent communities in the North Charlotte metropolitan area. The property is in close proximity to Lake Norman as well as to regional employers, major travel routes and the Charlotte-Douglas International Airport.
"This transaction speaks very much to the strength of our deal sourcing capability as well as our ability to facilitate complex transactions and execute on them, quickly." said Ramin Kamfar, Chairman and CEO of BRG. "We are acquiring a high-end and highly-marketable asset at a very favorable cost basis."
The company expects to close Ashton I during the current quarter, and Ashton II when stabilized, which the Company expects to be in the third quarter.
BRG plans to acquire Ashton I and Ashton II, respectively, for $44.75 million or $140,700 per unit, and up to $21.8 million or $144,500 per unit, with final pricing for Ashton II based on in-place financial performance. The Company expects to make equity investments of approximately $14 million and $7 million for Ashton I and Ashton II, respectively. BRG will assume the existing loan on Ashton I of $31.19 million and intends to secure new senior mortgage financing of approximately $15 million when it acquires Ashton II.