DURHAM, NC - Starwood Real Estate Income Trust, a non-traded REIT managed by Starwood Capital Group, announced the acquisition of Exchange on Erwin, a Class A, high-quality mixed use property totaling 265 multifamily units and 96,949 RSF of commercial space in Durham, NC. The property was acquired through an off-market transaction for approximately $111 million, excluding closing costs, from an affiliate of Ram Realty Advisors ("Ram"). The multifamily property was recently completed in 2018 and the commercial property, consisting primarily of medical office space, was completed in 2007.
The property benefits from its prime location directly across the street from Duke University, which is the largest employer in the Raleigh-Durham market, with nearly 40,000 employees. This provides its tenants with exceptional access to the University Health System buildings, including its world-renowned hospital. A substantial portion of the multifamily units are leased to Duke University graduate students and the medical office space is 100% leased to various Duke University medical tenants. The Exchange on Erwin multifamily units were 99% occupied and the commercial space was 95% leased as of the acquisition date, resulting in overall occupancy of 98%.
In addition to its location directly adjacent to Duke University, Exchange on Erwin is near world-class medical facilities, within a strong biotech and innovation hub, and just 15 minutes from Research Triangle Park, which has 22.5 million sq ft. of office space and is home to 55,000 employees.
"We like Exchange on Erwin because is it uniquely positioned to benefit from a significant demand driver in Duke University that has been in-place for more than 125 years and continues to expand and strengthen," said Mark Keatley, Managing Director of Acquisitions, Starwood Capital Group. "We believe this asset will allow SREIT to achieve strong, risk-adjusted cash yields from reliable and sustainable tenancy tied to the educational institution and healthcare industries."
"Exchange on Erwin is another example of SREIT acquiring high-quality real estate in its targeted high-growth markets, which are benefitting from strong population and job growth," said John McCarthy, CEO and President of SREIT. "SREIT focuses on markets with strong growth dynamics because they drive occupancies, rents, and values upward."
Exchange on Erwin was originally acquired by Ram in November 2015 on behalf of Ram Realty Partners III LP. Immediately following the acquisition, Ram designed, permitted and developed the 265 multifamily units as part of its strategy to create a vibrant mixed-use project. "We acquired Exchange on Erwin largely as a result of our conviction about the quality of the location and the opportunity to improve the asset," said Casey Cummings, CEO of Ram. "We are pleased that an institution like Starwood Capital Group believes as strongly in the property as we did when we launched our value-add strategy."
"The sale of a high-quality property is always bittersweet but we are confident that SREIT will continue to be a good steward of the asset."