GE's $256M Scores 3,532-Unit Multifamily Win

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DALLAS-Laying $256 million on the line, GE Real Estate North America Equity has closed on the 3,532-unit, 10-property portfolio with FirstWorthing Corp. and Principal Financial Group. The value-add pickup is the third portfolio buy since September for GE’s multibillion-dollar program.

There are six multifamily properties in Dallas, three in Greater Atlanta and one in Austin. GE funded the all-cash, no-leverage acquisition through its Direct Investment Program, an opportunistic buying platform that has acquired more than $1.6 billion of assets since it launched and is on track to corner another $2.5 billion before the year ends.

The just-bought package, a mix of class A, B and C, has an in-place 75% economic occupancy. “We think we can take that up to the mid- to high 80% range,” Greg Bates, managing director of the Stamford, CT-based GE buying group, tells GlobeSt.com. The upside lies in burning off concessions and polishing off the lease-up of the Cityville projects in Dallas and investing $7 million to $10 million to upgrade three Georgia assets and one in Austin.

Each asset stands on its own merit, but the portfolio’s sleeping beauty is the 533-unit Peachtree at 710 NE Peachtree St. in Midtown Atlanta’s Theater District. Bates says “we are still evaluating the size and scope” of the makeover, which will include retail and office space that he labels as currently “under-utilized” space. The complex, built in 1952, sits beside Fox Theatre, a 1920s-era Yaarab Temple Shrine Mosque that served as the headquarters for the Shriners organization and is now on the National Register of Historic Places.

Bates says the portfolio’s properties are closely aligned with the 3,141-unit multifamily component that GE picked up in last year’s $2-billion, mixed-use deal with Dallas-based Crow Holdings Fund III. The similarities are locations and product type, allowing the new owner to play on economies of scale. The GE buying group’s other portfolio buy was industrial.

Bates says the plan is to amass $750 million to $1 billion per year of multifamily properties. Three- to five-year holds are planned. “We will aggressively trade in and out of assets,” he says. “We’re a total return buyer. We’re targeting 7.5% to 8% un-leveraged IRR.” And, he’s bidding right now on two smaller portfolios, but the verdict is still a few weeks away.

Malcolm McComb, vice chairman for CB Richard Ellis in Atlanta started marketing the portfolio last summer for Dallas-based FirstWorthing and equity partner, Principal. The JV also is selling a student housing portfolio and possibly its development land too, but Bates says GE was interested only in the stabilized, conventional real estate.

“The transaction’s had a long life cycle. In today’s marketplace, you have to be patient. We stuck with it and we were able to close the deal,” Bates says. “We knew a lot of the properties and certainly had surety of close so that helped the process. For us, it’s a sweet spot acquisition. They’re in markets we understand very well.”

First Communities Realty Inc. of Atlanta will manage 710 Peachtree and Charleston, SC-based Greystar Real Estate Partners LLC gets the balance to oversee. Bates says all complexes will remain in the rental pool.

Also on GE’s rehab list is the 223-unit Worthing Ridge at 1817 E. Oltorf St. in Austin; 378-unit Worthing Crest at 3200 Spring Hill Pkwy. in Smyrna, GA; and 360-unit Worthing Creek at 2700 Summit Creek Dr. in Stone Mountain, GA.

Bates praised the Cityville concept, which puts class A units on the fringe of prime real estate at a price point that’s affordable for young professionals. The Cityville properties are 226 units at 2819 N. Fitzhugh Ave., 238 units at 1333 N. Peak and 128 units at 1811 Greenville Ave.

The Dallas piece also included the 324-unit Worthing Bend at 3701 W. Pioneer Dr. in Irving; 622-unit Worthing Pointe at 1319 Cavalier in Richardson; and 500-unit Spring Creek at 5501 Naaman Forest Blvd. in Garland.