Greystar Partners on $440M Apt. Recap

CHARLESTON, SC—Greystar Real Estate Partners said Monday it had sponsored a $440-million recapitalization of a Silicon Valley apartment portfolio with partners including Ivanhoé Cambridge and Goldman Sachs. It continues in a line of joint investments that Greystar has made with Ivanhoé and Goldman, which partnered this past January to buy a portfolio from Equity Residential for $1.5 billion, a partnership that Ivanhoé joined in April.

The 1,640-unit portfolio includes Kimberly Woods, the Reserve and Park Kiely, all in San Jose; Verandas in Cupertino, CA; and Woodbridge in Sunnyvale, CA. Ivanhoé had acquired Kimberly Woods last October for $63 million, and Greystar will execute a value-add capital improvement program on all five properties that will include both interior and common area improvements.

“This transaction represents a continuation of Greystar's strategic focus on acquiring well-located apartment communities below replacement cost in markets with robust employment growth and long-term barriers to new supply,” says Kevin Kaberna, senior managing director of investments for Charleston, SC-based Greystar's West Region.  “We believe there is a significant opportunity to utilize our capital renovation and operational expertise repositioning the portfolio and taking advantage of the positive fundamentals in the Bay Area.”

CBRE's Newport Beach office arranged the $287-million debt financing for the portfolio with support from CIBC's real estate group. “CBRE along with CIBC were able to create a portfolio financing that met the complex needs of our clients,” says Troy Tegeler, who led the CBRE financing effort. Eastdil Secured advised Ivanhoé on the transaction and served as adviser and placement agent.

Greystar began the month of September with a $460-million acquisition of 14 apartment communities, located mainly in Texas. The deal effectively got the seller, Northbrook, IL-based Inland American Real Estate Trust, out of the multifamily business.