CORE at Lindbergh, 358 Units, Atlanta, GA
How We Got It
We acquired Belle Rose in late 2018 and immediately rebranded the asset as Core at Lindbergh. . It was acquired on behalf of a longstanding client as the last of three acquisitions which helped them solve a pressing 1031 exchange requirement. We acquired the asset for a price lower than the seller’s acquisition price 2 years earlier by moving quickly when a billion-dollar portfolio of southeast multifamily assets came to market in early 2018. We underwrote all the portfolio assets and only had interest in Core.
Investment Rationale
Core was a unicorn–a new downtown asset with significant physical and operational value-add. Our adjusted basis was just over $210,000 per unit, well below recent sales comps and lower than replacement cost for “wrap” style construction. During diligence, it became clear that the wealthy out-of-state owner did not dedicate enough resources to oversee his multifamily portfolio, with just one senior asset manager for more than 25 assets. And the seller retained a property management company which doesn’t have the best track record. Other than the clear management play, we were attracted to the property location. Core sits less than a half mile from MARTA, just one stop from Buckhead (100,000+ jobs) heading north, and one stop from Midtown (125,000+ jobs) heading south. Core is across the street from a new Kroger’s and a Home Depot-anchored retail-oriented mall providing tenants with walking access to desirable retail and dining. Core sits in the submarket of Lindbergh which is now fully built-out and which hasn’t seen any new construction since we closed in 2018. Prime lots in adjacent higher rent submarkets like Buckhead and Midtown are already developed. As a result, new multi-housing will mostly come via high rise towers that are much more expensive to build. We’ve seen new supply dwindle to 35% of peak levels so the investment thesis is providing correct.
What We Did
While the asset is just a few years old, we completed an ambitious and exciting revamp of the amenity spaces. We’re redid the clubhouse finishes, lighting, and furniture. We added amenities in two of the fallow courtyards including covered soft seating and a revamped fire pit. We fixed up the existing dog run, painted the dilapidated hallways and addressed the beaten-up hallway flooring either by laying down new LTV flooring to dampen noise and provide a cosmetic face lift.
Results
YOY rents were up 4.8% as of Q2 2021 in our submarket. T12 deliveries were just 35% of peak deliveries in the 5 adjacent submarkets. The forward pipeline is every more muted. So, the outlook is rather sunny as we look forward to 2022 and 2023 with an eight figure refinancing cash-out looking highly likely when the assumed mortgage matures in a few years.