The properties include the 506-unit Cloisters Apartments and Townhomes, the 316-unit Country Club Apartments, the 88-unit Hawthorne Hills Apartments and the 150-unit Woodlands. The assets are 94% leased, one of the main reasons the complexes sold in an unstable economy, says Matthew Friedman, an associate VP with Marcus & Millichap Real Estate Investment Services. He and James Walsh, VP of investments, represented the Richmond Heights, OH-based Associated.
"The owners and managers of the properties did a great job to get the occupancy above the averages in the market," Friedman tells GlobeSt.com. "The Toledo market is still pretty strong, it helps that interest rates are low, it helps the sellers while it's a buyer's market; sellers have the opportunity to maximize their value. Also, I think across the Midwest there's a slowdown in the pipeline, we expected several projects that aren't coming, though new developments on the coasts and the Sunbelt haven't slowed."
Michael Lawson, VP of investor relations with Associated, says the price reflects an overall capitalization rate of 7%, based on trailing 12 month net operating income and after $800 in capital expenditures and a 3% management fee. "The decision to sell was part of a continuing strategy to reposition Associated's portfolio so that we don't have as much in the Midwest, to move to higher growth markets," Lawson tells GlobeSt.com. "We like the Midwest, at least selected submarkets, but when we went public in 1993, 100% of our net operating income came from Ohio. We think it makes good business sense to diversify our holdings, and reposition our assets to areas such as the mid-Atlantic states. Our goal is that by the end of 2008, we'll have just 50% of our NOI coming from Ohio, and the rest from markets outside the Midwest." The firm now has a portfolio of 53 properties containing 13,011 units in nine states.
The complexes in the portfolio are all within five miles of each other, and were built between 1973 and 1990, and have amenities that include swimming pools, fitness centers, washer-dryer hook-ups and walk-in closets. They rent for between $550 to $1,000 per month.
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