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Oaktree REIT Acquires $59 Million Apartment Property in Georgia

April 17, 2019

Oaktree REIT Acquires $59 Million Apartment Property in Georgia

April 17, 2019 | James Sprow | Blue Vault

On April 11, 2019, Oaktree Real Estate Income Trust, a nontraded REIT program, partnered with TruAmerica Multifamily, LLC through a joint venture to acquire a fee simple interest in Anzio Apartments, a multifamily asset located in Lawrenceville, Georgia, from Anzio Apartments, LLC for $59.2 million (exclusive of closing costs). The joint venture acquired the property and paid related closing costs through a combination of $44.4 million of property-level debt from the Federal Home Loan Mortgage Corporation, $14.9 million funded to the joint venture by Oaktree REIT from borrowings under the company’s line of credit and $1.7 million funded by TruAmerica.

Oaktree REIT owns a 90% interest in the joint venture and TruAmerica owns a 10% interest in the joint venture. The REIT will control all major decisions of the joint venture (subject to TruAmerica’s consent with respect to certain limited decisions) and has the ability to trigger a sale of the property at any time. Oaktree REIT will have operational control and TruAmerica will act as the day-to-day property manager.

March NTR Sales Surge, Up 48% From February, Nontraded BDC Sales Up 12%

The property is a 448-unit multifamily asset located in Lawrenceville, Georgia. Built in 1986 and sitting on 35 acres, the property features a mix of one- and two-bedroom homes with large floorplans averaging 975 square feet. The property is located in a convenient location of Gwinnett County in metropolitan Atlanta, Georgia. As the economic capital of the Southeast and a global business hub, Atlanta is the tenth largest metropolitan area by gross domestic product in the United States. Gwinnett County is one the fastest growing counties in the nation, having more than doubled its population since 2000.

Southeast Gwinnett County, where the property is located, is a high barriers-to-entry submarket, characterized by limited new supply and strong organic rent growth. The submarket within a five-mile radius of the property has a total inventory of ~9,000 multifamily units and has experienced only ~400 units of new supply within the last ten years. As a result, from 2010 to 2018, the submarket has experienced strong effective rent growth of 55% and average occupancy of 94%. The property faces competition from similarly situated properties in its submarket.

The joint venture plans to transform all units to a more modern finish level and make significant upgrades to the common areas including the community’s pools, clubhouse, fitness center, outdoor dining areas and sports courts. The Joint Venture intends to spend $8,100 per unit in total renovation with $3,400 per unit for interior, $2,100 per unit for exterior and $2,600 per unit for deferred maintenance.

The leases at the property are generally short-term in nature and have a term of 12 months or less. As of April 1, 2019, approximately 71% of the multifamily leases expire within 12 months from such date.

Oaktree Real Estate Income Trust, Inc. was formed on July 27, 2017, to invest primarily in in well-located, high quality commercial real estate assets that generate strong current cash flow and could further appreciate in value through moderate leasing and repositioning strategies. As of December 31, 2018, the REIT was in its organizational period and had not commenced principal operations.

Source:  SEC, Blue Vault

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John E. Moriarty, ChFC
December 2015
February 3, 2016

I have been in the financial services industry for 20 years and our firm provides an education platform that gets clients to “think differently” about their financial picture.  For many years we have communicated to clients the need to diversify their portfolios using alternative asset classes and more specifically, private non-traded investments.  Due diligence on these types of financial vehicles is essential and when I learned about Blue Vault in 2010, our firm immediately began using their material as a tool to build confidence in the minds of our advisors on which alternatives to recommend to clients.  I am impressed with the way Blue Vault continues to add value to their subscribers and I view their publication as a tremendous resource in today’s complex world.