JRK Property Holdings, one of the largest multifamily landlords in the United States, has acquired a 538-unit apartment complex in the Washington, DC suburb of Gaithersburg, MD, the first in a series of acquisitions and dispositions totaling nearly $1.6 billion that is expected to close by year end.
Cadence at Crown, which was built in 2014 and is 95 percent occupied closed on October 1. It is the largest of five communities, that JRK will close on in October. The four other communities ranging in size from 152 to 408 units, are located in Tempe, AZ; Denver, CO; Lexington Park, MD; and Baton Rouge, LA and are collectively 96 percent occupied. Total cost for the five communities, acquired in separate transactions from different sellers will be $375 million.
JRK is acquiring the assets through its newest multifamily value-add funds: $800 million JRK Platform IV, which targets multifamily investments built after 1990; and its $330 million JRK MF Opportunities II, which targets assets built before 1990. With both funds less than 30 percent invested, JRK will continue to look for compelling opportunities in multifamily, as well as hotels through its inaugural $350 million JRK Hospitality Fund I. The investment vehicles are funded with capital from institutional investors, high-net worth individuals and family offices.
“Even with cap rate compression in many markets since pre-COVID, we are still finding compelling opportunities that generate significant cash-on-cash returns under severely stressed projections,” said JRK Vice President of Acquisitions Daniel Lippman. “We are focused on long-term value creation and are not deterred by what we feel is short-term volatility if we believe the asset and the market are positioned to recover and perform well. However, Cadence at Crown and the other assets we have under contract have had little to no delinquency and maintained high occupancy over the past several months,” he said.
JRK also is marketing for sale a $1.2 billion portfolio of 13 multifamily communities located in California, Colorado, Florida, Georgia, North Carolina, Ohio, and Texas. Each property, ranging in size from 64 to 709 apartment homes, are being marketed separately, but the firm has already received interest from several institutional buyers, to acquire the assets on a regional basis or as an entire portfolio. Occupancy across the 13 assets is 96 percent. First round offers were due October 1 and best and final offers have been set for October 15.
“We have owned these properties from funds we raised 10-12 years ago,” added Lippman. “Our plan is to replace these assets with acquisitions from our two newest funds.”