Junction at Antiquity, 329 Units, Cornelius, NC
How We Got It We acquired Junction at Antiquity in the spring of 2018 as a 1031 TFE for a longstanding partner. Competition for this asset was intense with final pricing coming in at $187,500 a unit vs. $185,000 original whisper price. This was our 6th closing with Cushman’s Southwest team and our 2nd closing with the developer (LIV) which helped secure the win.
Investment Rationale The location and product are both unique and exceptional. Junction is located less than 1 mile from Charlotte, NC’s most affluent bedroom community. It sits within a perfectly executed mixed-use development with thriving retail that affords the tenants’ walkable access to dining, shopping, and an adjacent Kroger’s. Junction is part of a 100+ acre master planned community that includes several hundred new single-family homes and cottages and a handful of pocket parks. Residents can access downtown Davison out of the back of the community over an antique covered bridge. Davison is often voted Charlotte’s most charming downtown area and offers a mecca for fine dining, street fairs, concerts, and outdoor events. Junction is arguably irreplaceable because developers are reluctant to build retail into an overbuilt retail environment and there just aren’t many 100+ acre sites for a master community of this grandeur. Junction benefits from high area housing values that make renting a more affordable option. And many of Junction’s tenants are renters by choice, including retirees who want a care-free lifestyle, young professionals who value the freedom afforded by renting, and Millennials who value the community amenities. Junction has a handful of “hooks” which help attract three distinct target demographics including retirees (about 20% of the tenant base), families who can’t afford new homes which have monthly payments far higher than the rent structure at Junction, and working professionals heading south to the CBD or, in this job-rich suburban location, staying immediate. The “hooks” include a) best-in-submarket amenities, b) proximity to downtown Davison, the area’s top spot for dining and outdoor events, c) exceptional unit finishes and d) a location within a vibrant and attractive mixed-use master planned community. We also saw upside due to a yet-to-be completed I-77 expansion project. That project is now complete and shortened the commute into the CBD, propelling rent growth faster than other submarkets in the MSA. We saw several million dollars of valuation upside by setting the unit amenity values and floorplan “differentials” more aggressively. And we saw significant upside on 2nd and 3rd generation leases. The developer is known to set market rents low to ensure a rapid and successful lease-up which underpins the potential for outsized rental rate gains on 2nd and 3rd generation leases.
Results We sold this asset in January 2022 at the peak of the market. This asset had less value add than other acquisitions since it was new when we closed but the valuation jumped from our acquisition price of $187,500/unit in 2018 to our disposition price of $360,000/unit in 2022, as a result of buying correctly and overall cap rate compression for high-end suburban assets like Junction. We realized 37.5% net IRR and a 3.07x multiple on invested capital (after exit costs and after the sponsor promote).