ATLANTA, GA - Bluerock Residential Growth REIT announced that it has approved an investment of approximately $15.0 million in a joint venture to develop a Class A, 285-unit apartment community in Atlanta, Georgia, to be known as the Cheshire Bridge Apartments. Situated in a highly desirable location directly adjacent to Atlanta's Buckhead and Midtown neighborhoods, Cheshire Bridge will be a five-story, luxury multifamily rental community on 3.88 acres. Total projected development costs are estimated at $48.2 million, or $169,000 per unit.
BRG's underwriting projects a trended return on cost for the project of approximately 7.0% at stabilization, based on expected development cost and projected rental income. This compares very favorably to estimated market cap rates of 4.50% to 5.25% for comparable product. BRG's joint venture partners on this investment are Atlanta-based Catalyst Development Partners and an affiliate of Bluerock Real Estate, LLC. This is BRG's second development project with Catalyst.
BRG expects to invest approximately $15.0 million of preferred equity, and, together with the Bluerock affiliate, will contribute up to 90% of the required equity for the development, with the balance contributed by Catalyst. Under BRG's invest-to-own structure, the Company will be entitled to a current-pay preferred return on investment of 15% per year, with the right, once the project is developed and stabilized, to convert its preferred equity investment into a control-position common membership interest in the controlling member of the joint venture.
"I believe that the Cheshire Bridge development will be strongly accretive to the REIT," said Ramin Kamfar, Chairman and CEO of BRG. "The development is positioned to benefit from a very attractive development cost basis, while the location will, we believe, command competitive rents within the market."
Cheshire Bridge will feature studio, one-, and two-bedroom unit layouts averaging 871 square feet. Located in a highly desirable area at the intersection of Cheshire Bridge Road and I-85, the development will offer immediate access to two of Atlanta's largest employment nodes, Buckhead and Midtown, which encompass approximately 100,000 and 86,000 employees, respectively. Buckhead and Midtown are also home to a combined 22 million square feet of retail, and a university population of approximately 20,000 students with Georgia Tech and Emory University less than three miles away.
The luxury community will be developed with best-in-class lifestyle amenities including a resort style pool, fitness center, and business and media centers. Unit interiors will be condominium quality, featuring nine-foot ceilings, high-end stainless steel appliances, granite countertops, upgraded lighting, and garden bath tubs.