Grubb & Ellis REIT to Buy Mission Residential

Grubb & Ellis REIT to Buy Mission Residential SANTA ANA, CA - Grubb & Ellis Apartment REIT, Inc. today announced that it has entered into definitive agreements totaling $182 million to acquire nine multifamily properties from affiliates of MR Holdings, LLC and substantially all of the assets of Mission Residential Management, LLC, the Mission Residential property management business. The acquisitions are subject to customary closing conditions and the satisfaction of other requirements as detailed in the agreements.

"The proposed acquisitions announced today will be a tremendous step in the growth and evolution of Grubb & Ellis Apartment REIT that will strengthen the company and add significant value for our stockholders," said Stanley "Jay" Olander Jr., chairman and chief executive officer. "We will enjoy greater economies of scale, equity will increase by approximately 18 percent, and the transactions will be immediately accretive to our bottom line earnings, increasing funds from operations and coverage of our investor dividend."

The nine multifamily properties include 2,676 apartment units located in North Carolina, Tennessee and Texas. One of the properties is owned by a limited partnership for which an affiliate of MR Holdings serves as general partner. The other eight properties under contract are owned by Delaware statutory trusts for which affiliates of MR Holdings serve as trustee. Total consideration for the acquisition of the nine properties totals $176.9 million comprised of cash, debt and limited partnership interests in Grubb & Ellis Apartment REIT's operating partnership.

Mission Residential Management is the property manager of 41 multifamily communities, including the nine under contract for purchase, totaling approximately 12,000 apartment units in Georgia, Texas, North Carolina, Tennessee, Utah and Florida. Under terms of the asset purchase agreement, Grubb & Ellis Apartment REIT will acquire substantially all of the assets of Mission Residential, including workforce in place and the assignment and assumption of the property management agreements for all of the Mission Residential properties, for $5.5 million in cash plus the assumption of certain liabilities.

According to Olander, "The acquisition of the Mission Residential property management business will provide immediate fee income to Grubb & Ellis Apartment REIT, provides a platform for the self-management of our entire portfolio, and adds nearly 300 experienced professionals to our talented employee base."

Additionally, Grubb & Ellis Apartment REIT will seek the consent of the respective tenant-in-common owners of six multifamily communities totaling 1,510 apartment units in North Carolina and Texas to acquire these properties. Total consideration for these proposed acquisitions would be $99.5 million, including limited partnership interests in the REIT's operating partnership and assumed debt.

The Grubb & Ellis Apartment REIT portfolio is currently comprised of 14 multifamily properties totaling 3,747 apartment units valued at approximately $358 million, based on purchase price. Should the REIT successfully complete all 15 proposed property acquisitions, its portfolio will total 29 multifamily properties totaling 7,933 apartment units valued at approximately $661.4 million, based on purchase price.

FBR Capital Markets & Co. served as financial advisor to MR Holdings in connection with the transactions, while Wells Fargo Securities / Eastdil Secured served as financial advisor to Grubb & Ellis Apartment REIT.

Grubb & Ellis Apartment REIT, Inc. is a publicly registered, non-traded real estate investment trust that seeks to preserve, protect and return investors' capital contributions, pay regular cash distributions, and realize growth in the value of its investments upon the ultimate sale of such investments. Grubb & Ellis Apartment REIT is seeking to raise up to approximately $1 billion in equity and to acquire a diversified portfolio of apartment communities with stable cash flows and growth potential in select U.S. metropolitan markets. Grubb & Ellis Apartment REIT has acquired a geographically diverse portfolio of 14 apartment properties valued at approximately $358 million, based on purchase price.
Source: Grubb & Ellis Apartment REIT

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