Grubb REIT Inks $182M Deal for 2,676 Units

SANTA ANA, CA-Grubb & Ellis Apartment REIT has signed agreement to acquire nine multifamily properties totaling 2,676 units in three states from Oakton, VA-based MR Holdings LLC, as well as all of the assets of Mission Residential Management LLC, for $182 million. The Grubb & Ellis REIT also is negotiating with the tenant-in-common owners of six additional multifamily properties totaling 1,510 apartment units in North Carolina and Texas to acquire those properties for $99.5 million.

The complexes that Grubb & Ellis Apartment REIT has agreed to buy are in North Carolina, Tennessee and Texas. One of the properties is owned by a limited partnership for which an affiliate of MR Holdings serves as general partner. The other eight are owned by Delaware statutory trusts for which affiliates of MR Holdings serve as trustee.

Total consideration for the acquisition of the nine properties totals $176.9 million comprised of cash, debt and limited partnership interests in Grubb & Ellis Apartment REIT's operating partnership. The other $5.5 million of the $182 million is for the assets of Mission Residential, including work force in place and the assignment and assumption of the property management agreements for all of the Mission Residential properties. Mission Residential Management is the property manager of 41 multifamily communities, including the nine under contract for purchase, totaling approximately 12,000 apartment units in Georgia, Texas, North Carolina, Tennessee, Utah and Florida.

According to Stanley "Jay" Olander Jr., chairman and chief executive officer of Grubb & Ellis Apartment REIT, the REIT "will enjoy greater economies of scale" as owner of the properties, while the acquisition of the Mission Residential property management business "will provide immediate fee income to Grubb & Ellis Apartment REIT." He adds that the acquisition "provides a platform for the self-management of our entire portfolio" and adds nearly 300 experienced professionals to the REIT's employee base.

Additionally, Grubb & Ellis Apartment REIT will seek the consent of the respective tenant-in-common owners of six multifamily communities totaling 1,510 apartment units in North Carolina and Texas to acquire these properties. Total consideration for these proposed acquisitions would be $99.5 million, including limited partnership interests in the REIT's operating partnership and assumed debt.

The Grubb & Ellis Apartment REIT portfolio is currently composed of 14 multifamily properties totaling 3,747 apartment units valued at approximately $358 million, based on purchase price. If the Santa Ana-based company closes on the nine properties and also negotiates the acquisition of the six others, its portfolio will total 29 multifamily properties totaling 7,933 apartment units valued at approximately $661.4 million, based on purchase price.

FBR Capital Markets & Co. served as financial advisor to MR Holdings in connection with the transactions, while Wells Fargo Securities/Eastdil Secured served as financial adviser to Grubb & Ellis Apartment REIT.