AURORA, IL - Prospect Capital Corporation announced that a Prospect affiliate and co-investors recently acquired Orchard Village Apartments for $34.5 million of total asset value, $9.0 million of which was funded by a Prospect affiliate.
Sinatra & Company Real Estate and Stadt Group, two residential property acquisition and management firms, provided 20% of the equity capital on a basis subordinated to Prospect's capital. Prospect invested through National Property REIT, a private real estate investment trust owned and controlled by Prospect. Sinatra and Stadt serve as day to day managers of Orchard's operations.
Orchard is a 272-unit garden-style multifamily complex built in 2000 and located on 17.3-acres in Aurora, Illinois. Orchard's units feature private entrances, spacious patios and balconies, full-size in-unit washers/dryers, and 9-foot or vaulted ceilings in a majority of units. The stand-alone clubhouse includes a fitness center, clubroom with kitchen, leasing/management office, and outdoor swimming pool with large sundeck. Prospect, Sinatra, and Stadt plan on implementing a value-added investment program that includes both property amenity and in-unit upgrades.
Prospect structures its real estate property investments as investments of debt and equity in its multiple private real estate investment trusts. Prospect currently has three such REITs, including National, each of which works with different operating managers and co-investors to close and manage real estate property acquisitions. In combination with its prior real estate investments, Prospect in the past three years has in the aggregate invested $411.3 million in 18 separate transactions across 54 properties that include 39 multifamily residential apartment properties (aggregating approximately 14,000 multifamily units), 12 self-storage properties, and three single tenant net lease facilities, totaling approximately 14.8 million rentable square feet.
"The Orchard real estate investment continues Prospect's strategy of selectively acquiring stabilized yield properties at a discount to replacement cost in markets with limited new construction pipelines and positive demographic and economic trends," said Ted Fowler, Managing Director of Prospect Capital Management LP. "These rent-producing properties generate attractive and growing current yields (with long-term fixed rate financing), long-term capital appreciation potential, inflation-protecting income streams, and diversification across geography, construction vintage and operating manager."