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PORTSMOUTH, NH-A New York City-based real estate investment firm has entered the multifamily market here via its purchase of a three-phase, 428-unit apartment community just off Route One. The Beechstone portfolio was purchased by an affiliate of TGM Associates from Forum Development and Labrie Family Holdings.

Calls to the sellers and TGM officials were not returned by press deadline, but public records indicate the transaction amounted to nearly $50 million, which would equate to $117,000 per unit. The brokers at Cushman & Wakefield’s Capital Markets Group declined to discuss details of the sale, but ED Simon Butler acknowledges that the opportunity was pursued vigorously by investors. “Despite being over 20 years old, Beechstone is a well-maintained asset that was ahead of its time,” says Butler, requiring TGM to beat out several national competitors to secure the complex.

Spacious floor plans and submetering of utilities were cited as forward-thinking elements of the 73-acre complex, which was constructed in three phases between 1971 and 1986. Being the last major market-rate apartment community to be built in Portsmouth demonstrates how imposing the barriers to entry are there, says C&W ED Biria St. John, who also handled the sale negotiations along with C&W principal Robert Griffin Jr. “It’s a good story for investors,” St. John says, explaining that most of the region does not allow multifamily as of right, and pursuing zoning relief for such uses can be arduous. Massachusetts, for example, has legislation that requires municipalities to accept multifamily projects, but no such mechanism exists in New Hampshire, says St. John.

As a result, the upper tier of the New Hampshire Seacoast is bereft of new product, and St. John says new inventory is unlikely over the near term. Presently rated as a class B development, Beechstone could aspire to the class A level through capital improvement programs that TGM reportedly plans to institute. “It’s truly a value-added play,” says St. John, predicting that TGM’s experience in the multifamily arena will enable the firm to take Beechstone to the next level. The buyer is now operating in 25 states, with a portfolio of more than 15,000 units and total investment exceeding $900 million.

Even without the capital infusion, occupancy at Beechstone has been consistently strong, says St. John, standing at 98% at the time of the sale. The 28 garden-style buildings are wood-frame construction offering a mix of brick, vinyl and wood exteriors. All two-bedroom apartments and 59% of the units have a second full bath, notes Butler, while community amenities include a fitness center, laundry facilities and playground. The three phases of development are branded as Colonial Pines Estates, Stonecroft and Beechstone.

Trouble in the capital markets has made doing multifamily sales more complicated, but St. John notes that the product type has been less influenced by tighter liquidity due to the welcomed presence of Fannie Mae and Freddie Mac, both of which have stepped in to ease the financing shortfall. Meanwhile, capital is still embracing apartments, reports St. John, whose team has negotiated several high-profile apartment deals in New England this year. The firm brokered the $103-million sale of the 312-unit CambridgePark Place in Cambridge in August, and also assisted Equity Residential Properties this summer in its $181-million sale of Granada Highlands in Malden, one of suburban Boston’s most prominent multifamily developments.

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