Knighthead Funding, LLC (Knighthead) has provided Eastman Companies with a $16 million first mortgage for the acquisition and conversion of a 437-bed student housing property into a 149-unit multifamily property in Myrtle Beach, South Carolina.
Located at 110 Chanticleer Village Drive in the Carolina Forest neighborhood, adjacent to the Myrtle Beach National Golf Club, the property offers a strong value-add opportunity with nearly all units in “classic” condition with original finishes. The sponsor plans to convert the current layout into 144 three-bedroom apartments and five studio units, including light interior renovations and a modest exterior refresh/upgrade to bring the units in line with market rents for similarly renovated product.
The property has operated as student housing for the Coastal Carolina University campus. The sponsor believes converting it into a multifamily property is a better fit for the local demographic, which consists primarily of recent graduates, young professionals and families looking to take advantage of the strong local public school system. Carolina Forest is among the top school districts in the Myrtle Beach MSA and among the top 15 percent within the state of South Carolina.
Sponsor principals have experience in student housing conversions and are currently executing a similar business plan in Nashville, Tennessee, taking a student housing property and converting to a conventional multifamily property.
“Our capital will help the sponsor’s vision for this property to become reality which will help meet the growing demand for quality multifamily properties in the market,” said Brian Sullivan, Knighthead’s Vice President who originated the loan.
Knighthead Principal Jonathan Daniel noted, “This is an example of our ability to close and structure loan transactions where the underlying business plan and loan basis are quite compelling, in an environment where most lenders are sidelined.”
The property is conveniently located with respect to employment centers and major roadways, and the surrounding apartment developments are experiencing healthy levels of demand, which is expected to continue over the foreseeable future. According to Axiometrics, the first quarter 2023 overall Myrtle Beach MSA apartment market average occupancy level was 94.6 percent.
