DALLAS, TX - Bluerock Residential Growth REIT announced that it has acquired two newly-developed Class A, institutional-quality apartment communities in the strong and growing Dallas-Fort Worth, Texas market: the 352-unit Sorrel Phillips Creek Ranch Apartments in Frisco, and 322-unit The Sovereign Apartments in Fort Worth. BRG acquired the properties through a joint venture for a total purchase price of $99.7 million, or approximately $147,900 per unit.
The acquisitions are projected to yield a pro forma year one stabilized cap rate of approximately 5.7%. This compares favorably to cap rates of 5.0% to 5.3% for assets of similar quality in the market. The Company sourced the transaction off-market at favorable pricing from a single seller through its operating partner, Carroll Organization.
BRG invested 95% of the venture's equity requirement, or approximately $32.9 million, with an affiliate of Carroll, funding the balance for a 5% stake in the venture. The joint venture further capitalized the investment with acquisition loans of approximately $67.6 million in total.
The Dallas-Fort Worth submarket is among the fastest growing in the US. Frisco, listed among Money Magazine's Top 100 Places to Live in the US, is expanding rapidly with the relocation of 10 Fortune 500 corporate headquarters and more than 150 regional headquarters into the immediate area. The population in Frisco has surged 307% in slightly under 15 years. Fort Worth, ranked #2 on Forbes' 2015 list of Best Cities for Job Seekers, is home to 18 Fortune 500 companies and is a hub for companies looking to relocate. Residential occupancy rates in both property submarkets exceed 95%.
The Sorrel and Sovereign properties each offer amply-sized one-, two- and three-bedroom layouts averaging 1,034 square feet and 1,071 square feet, respectively. Both properties feature high-end in-unit finishes and upscale shared amenities including resort-style pools, dog parks, 24-hour fitness centers, cyber cafes, and outdoor kitchens/barbeque spaces.
"The Sorrel and Sovereign acquisitions place BRG squarely in the path of the area's robust growth and fit neatly within an investment thesis that continues to deliver solid returns to the REIT," said Ramin Kamfar, Chairman and CEO of BRG.