Redwood Capital’s Rapid Growth Strategy Includes Purchase in Red-Hot Atlanta Market

It’s easy to understand the attraction apartment investors have for a submarket with more Fortune 500 companies per capita than any city in the country. 

Redwood Capital Group says that was among the many attractive features it found about Adley City Springs in metro Atlanta’s submarket Sandy Springs, Ga. The company acquired the 291-unit community on July 8.

The acquisition is part of the company’s ongoing accelerated growth plan that has Redwood Capital aiming to double its current $1.7 billion in assets during the next five years. The company expects to complete acquisitions totaling $600 million in the Southeast, Southwest and Midwest in 2021 alone.

Adley City Springs is a recently constructed, mid-rise property within walking distance of the restaurants and entertainment venues in downtown Sandy Springs. The submarket is home to regional headquarters for State Farm, Mercedes Benz, Cox Enterprises, First Data Corp. and others.

Redwood Capital Group’s portfolio consists of 8,600 apartments across 28 communities throughout the US with a gross asset valuation of approximately $2 billion. Its executives recently discussed the company’s plans.

David Carlson, managing partner and co-founder of Redwood Capital Group, said Adley City Springs was an off-market transaction that provided Redwood the opportunity to acquire the property directly from the seller.

“We were attracted to this property for a combination of reasons, including the property being a high-quality asset with a full amenity package,” Carlson said.

“Stated simply, this is a best-in-class deal with market-leading amenities and unit finishes compared to its competitive set. We are at the center of one of the largest office markets in the Southeast in a submarket with little to no new supply. Consequently, we expect healthy rent increases as demand for Adley grows.”

In keeping with Redwood’s goal of vertical integration, Adley City Springs is being managed by Redwood Residential, its property management subsidiary. Redwood Residential now manages approximately two-thirds of Redwood’s portfolio.

Delight Merrill, director of property management at Redwood Residential, said renter move-in specials are not needed in the current market space. To help it differentiate itself from competing properties, Merrill said the on-site team is trained to provide concierge-level service, while simultaneously exploring opportunities to implement smart-home technology. “This type of execution and focus is being followed across all Redwood Residential managed properties,” Merrill said.

Ryan Steppe, director of investments in Redwood Capital Group’s Atlanta office, said his company plans to hold this property for at least five years.

“Redwood is a long-term investor in Atlanta,” Steppe said. “We have five assets there worth a total of more than $300 million and with a variety of hold periods ranging from three to seven years. We expect Adley’s hold period to be consistent with this strategy.”

Adley City Springs offers studio, one- and two-bedroom floorplans with an upscale, spacious and modern design. In-unit amenities include nine-foot ceilings, granite countertops, stainless steel appliances, power-saving digital programmable thermostats, walk-in closets, large balconies or patios and in-unit washers and dryers. Community amenities include a spacious resident social lounge with pool table, shuffleboard and games; resort-style rooftop saltwater pool; outdoor grilling stations and al fresco dining area; business center with conference rooms and private offices; movie theater; golf simulator lounge; and dog-washing “paw spa.”

Redwood plans to add new top-of-the-line equipment to the social lounge and fitness center. The community also features nearly 10,000 square feet of retail space that already includes an Italian restaurant and will soon add a medical spa.

Merrill said hiring for her operations team has not been a challenge.

“Our team is absolutely top-notch at The Adley – we have a service-minded group of seasoned professionals caring for our residents and providing best-in-class attention to the asset,” Merrill said. “Redwood Residential’s culture centers on integrity, service and empathy, and we expect that by adhering to these tenets that our residents will continue to love, renew leases and recommend The Adley to others. Our challenge will be to continue to support our team so they can do what they do best each day: serve our residents. Happy residents equals happy investors.”