News From Archway Equities
In the largest multifamily transaction in Southern California to close this year, real estate investment firm Archway Equities (“Archway”) has acquired from 4919 Olive Street Properties LLC, The Paseos at Montclair North, a 385-unit multifamily community in the Inland Empire community of Montclair, CA for $150 million.
For Archway, which has more than $1 billion in commercial real estate assets under management, including 5,000 apartment units across the Sunbelt, The Paseos represents the firm’s first multifamily investment in California.
“Somewhere along the way, cap rates between the Sunbelt and coastal markets inverted and select pockets of Southern California should now provide more attractive risk-adjusted returns in the current environment,” said Archway President Sean Moghavem. “We are still very bullish long term on multifamily in the Sunbelt because of its favorable business climate, low cost of living and continued job and population growth. Having said that, we continue to see aggressive pricing that’s not factoring in short-term headwinds such as supply, rising property taxes and insurance costs We’ll always look to grow our Sunbelt portfolio but are also actively seeking opportunities in the Inland Empire, Orange County and San Diego.
“With a lot of institutional capital sitting on the sidelines, there are very few firms that would be able to close on a transaction of this size,” added Archway Managing Director Sankeerth Pulusani. “Consequently, we believe that we were able to acquire the best asset in this submarket,” he said.
Paseos at Montclair North is located at 4914 Olive Street at the Inland Empire’s eastern gateway to Los Angeles’s San Gabriel Valley. The Paseos’ location offers immediate proximity to the rapidly growing Inland Empire economy and prominent Los Angeles employment hubs, according to JLL who marketed the property for sale on behalf of the seller.
Nearby to Interstates 10 and 210, residents are a 60-minute commute to more than 6.5 million jobs. In addition, the property is within walking distance of the Montclair Transitcenter, an intermodal transit center providing bus and train service throughout the region. It also will be the future home of the eastern terminus to the Los Angeles Metro Rail “L” Line serving downtown Los Angeles when completed in 2028. The property also neighbors Claremont McKenna College, ranked as one of the top 10 liberal arts universities in the country, according to U.S. News & World Report.
Encompassing nearly two full city blocks, the garden style community features a unit-mix of studio, one-, two- and three-bedroom Santa Barbara inspired townhomes built around a central linear park with concert amphitheater. The property boasts a best-in-class amenity set including two resort-style pool areas with spas and cabanas, fitness facility with children’s entertainment suite, yoga room, conference center, and entertainment lounge. The property was 97% leased at closing.
While well maintained, 100 percent of the units have not been significantly updated since the property was developed in 2014. Archway plans to add designer touches to the unit interiors, create a co-working space and reimagine the amenity areas in what Pulusani describes as a “modest renovation.”
According to CoStar data, The Paseos is the largest of 546 multifamily transactions to close this year in Southern California, a market area that includes Los Angeles, Orange, Riverside, Ventura and San Bernardino Counties. It is only the second transaction to trade at more than $100 million.
Archway assumed the accretive in place Agency loan with five years remaining on the term.
Archway Equities (“Archway”) has acquired from HLC Equity, the 192-unit Toscana Apartments, in Carrolton, TX, one of the fastest growing suburbs in Dallas. The purchase represents Archway’s second apartment investment in the immediate submarket and increases the Beverly Hills, CA real estate investment firm’s Texas holdings to approximately 3,000 units.
“We strongly believe in the fundamentals in Texas, particularly for multifamily investments,” said Archway Vice President Jeffrey Moghavem. “With the Lone Star State’s business-friendly approach, coupled with the impressive growth of Dallas-Fort Worth, one of the most populous metros in the country, we remain very bullish on the market and will continue expand our already significant presence here.”
Archway was able to secure the deal by pre-empting the traditional marketing process due to their track record, reputation and the relationship that was built with HLC Equity.
This is Archway’s 8th transaction in the last 18 months.
Built in 1986 Toscana Apartments is a multi-family community with amenities that include a clubhouse with fitness and business center, resort style pool, picnic areas with barbecues, and a pet play area. Located at 17910 Kelly Blvd., Toscana Apartments is just minutes from the Dallas North Tollway and President George Bush Turnpike and is in walking distance or a short drive to numerous recreational, retail and restaurant options.
Archway plans to execute a capital improvement program which will include renovating the interiors of more than 50% of the units and enhancing common area amenities including the leasing office. The community was 99% leased at closing.
“When we originally purchased Toscana, we recognized the solid value proposition that the property offered given its strong location, and our ability to execute a value-add business plan. We are happy to have been able to deliver above market returns to our investors and to HLC Equity principals,” said Daniel Farber, CEO of HLC Equity. “Not only are we pleased to have exceeded our investment goals, but Toscana has also helped solidify the business case for our hybrid Layers model, showing that there is significant demand in the market for mid- to long term serviced apartments in traditional multifamily assets.”
Despite the sale, HLC Equity’s portfolio remains strong in the Dallas market, including a newly developed Class-A multifamily community called Southgate Apartments that HLC acquired in Q2 of 2022.
“Dallas has consistently delivered strong returns to HLC Equity and our investment partners, and will continue to be a focal point as we look to acquire new properties and expand our footprint,” added Farber.
Under the management of Dave Molitor, HLC Equity’s Head of Operations, Toscana’s average monthly occupancy rate was over 94% where it became the first to implement Layers, HLC’s operating model offering both serviced and conventional apartments to the growing mid- to long-term rental market.
The acquisition was leveraged with attractive bank financing.
David Austin and Rob Key of JLL brokered the transaction.
Archway Equities has been active in U.S. real estate since 1974, investing money on behalf of its principals, accredited investors and institutional joint venture partners. Since 2010, Archway has primarily focused on multifamily investing, but has also invested in several different asset classes including land entitlements and redevelopments. With a history approaching 50 years, the privately held real estate investment group has been successful investing throughout cycles and has always safeguarded investor capital. For more information, please visit www.archwayco.com.
In one of the largest value-add multifamily transactions by unit count in Austin this year, Archway Equities (Archway) and CAF Capital Partners (CAF) has acquired The Morgan, a 504-unit community in Austin, TX. For Archway and CAF, each of whom control approximately 1,000 multifamily units in the market, it is the first time the two firms have partnered on an investment in the Texas capitol.
Thanks to its strong relationships with principals and brokers in the Austin market, as well as the firms’ deep-seated reputation for being able to quickly execute and close on potential deals, Archway and CAF have been extremely successful in unearthing and closing on properties in Austin despite the competitive nature of the market. For The Morgan, they were able to pre-empt a full marketing process with a competitive offer and short due diligence period.
“The Morgan represented an opportunity to acquire a very functional and well-maintained value-add property with unrealized potential in a market with strong apartment fundamentals,” said Archway President Sean Moghavem. “We plan to continue to fine tune our portfolio building scale in markets where we have a significant presence like Austin.”
Built in the mid-1980’s the property offers a strong value-add opportunity. The previous ownership renovated approximately 45 percent of the units, and the new ownership plans to renovate the rest of the units, upgrading interiors with vinyl plank flooring, new countertops, stainless steel appliances, Nest thermostats, new recessed lighting and upgraded bathroom and kitchen fixtures. Community amenities include a bi-level swimming pool, resident lounge and a pet park. In addition, the team plans to cure the deferred maintenance on the property by repainting buildings and other community structures.
Located at 1801 Wells Branch Parkway, the property is located five minutes from North Austin’s two major economic hubs, The Domain (Austin’s “Second Downtown”) and Tech Ridge, which is home to such Fortune 500 companies as Facebook, IBM, Indeed, Charles Schwab, Dell, General Motors, and 3M. In addition, The Morgan is approximately eight minutes from Apple’s Parmer Campus, and nearby to the new Apple Operations America Campus currently under construction which is estimated to bring an additional 15,000 jobs to the area. The community was 95% leased at closing.
While the market’s job growth was temporarily slowed by the pandemic, the pace has begun to increase as additional companies continue to migrate to Austin.
“When the upgrades are completed, The Morgan will be an outstanding property in a market where job growth is outpacing the inventory of quality rental housing,” said CAF Capital Partners President, Jack Alexander.
Capital Markets completed the sale of the Axis and Mosaic multi-housing properties
NASHVILLE, Tenn, August 18, 2020 – JLL Capital Markets announced today that it has closed the $41.2 million sale of a two-property apartment portfolio in Nashville's thriving South submarket.
Archway Equities LLC., an affiliated entity of Archway Holdings Corp., sold the assets to an affiliate of Bond Companies in an off-market transaction via an unsolicited offer.
The portfolio comprises the Axis at 307 Glengarry Dr. and Mosaic at 1019 Patricia Dr. Located approximately 10 minutes from downtown, the portfolio's position along Murfreesboro Pike provides residents with fast access to Nashville's largest employment and entertainment nodes.
In addition, according to CoStar's recent Q2 report, South Nashville's cumulative growth has been strong, and rents are roughly 50% more expensive now than they were in 2010. This level of growth is outperforming the metro-wide figure by nearly 15 percentage points.
“We are strong believers in the fundamentals of Nashville and are committed to increasing our presence there,” said Sean Moghavem, President of Archway Equities. “We were able to exceed our business plan expectations in less than half our originally assumed hold period, resulting in a much stronger returns, even considering COVID. This is only due to Nashville’s dynamism and its ability to attract strong employers in its market.”
The JLL Capital Markets team was led by Senior Directors Ian Anderson and Peter Chacon.
“Despite the hurdles due to the pandemic, investor appetite for Nashville multi-housing remains strong,” Chacon said. “Buyers are confident in Nashville's long-term outlook and the market's ability to continue posting in the nation's top 10 rent-growth cities.”
DALLAS – JLL announced today that it has arranged financing for Archway Equities’ acquisition of six Class B multi-housing assets totaling 1,456 units in multiple states.
JLL worked on behalf of the borrower, Archway Equities LLC, an affiliated entity of Archway Holdings Corp., to secure the Freddie Mac financing, which will be serviced by Holliday Fenoglio Fowler LP, a JLL company and a Freddie Mac Optigo℠ lender. The portfolio has an average construction date of the mid-1980’s and totals 1.14 million rentable square feet.
The JLL Capital Markets team representing the borrower was led by Senior Managing Director Andy Scott and Director Michael Cosby.
Holliday Fenoglio Fowler, L.P. (HFF) announces the capitalization for the acquisition and renovation of Stone Ridge Apartments and Bristol Ridge Apartments, two apartment properties totaling 363 units in Nashville, Tennessee.
The HFF team worked on behalf of Los Angeles-based Archway Equities LLC to arrange the capitalization for the $29 million acquisition of Stone Ridge and Bristol Ridge Apartments. The seller acquired the assets in 2012 and 2013 as distressed bank-owned assets and spent the last six years improving and stabilizing them. The new partnership, with the help of asset managers Magma Equities and 37urban, intends to re-brand both assets and complete a renovation plan that will improve amenities and aesthetics on both properties.
Archway’s purchase of Stone Ridge and Bristol Ridge Apartments closed just days ahead of Amazon’s announcement of 5,000 new jobs in the Nashville market as well as the announcement of a new 600-employee office for Ernst and Young and AllianceBernstein’s move of its headquarters from downtown Manhattan to downtown Nashville.
Both properties are within six miles of downtown Nashville, accessible via U.S. Highway 41 and Interstates 24 and 40. The communities are adjacent to the Murfreesboro Pike retail corridor, which provides a wide variety of shopping and dining options, and proximate to the proposed MLS Stadium at the Nashville Fairgrounds. The area is also well-connected to public transportation and the Nashville International Airport.
The HFF equity placement team representing the sponsor included senior director Zack Holderman and analyst Daniel Pinkus.
“We are excited to enter the market with these two assets,” stated Sean Moghavem, President of Archway Equities. “Between the $300 million, 30,000-seat MLS stadium development and the $1.2 billion airport expansion nearby, we knew it would be a strong opportunity for us. We’re eager to find more assets here in the coming months and believe this market will continue to bear successful opportunities for us.”
“This portfolio is an excellent example of a forward-thinking sponsorship group with the capabilities and expertise to execute a complex business plan,” Holderman added. “Nashville is an exciting market with strong fundamentals, particularly for this profile of investment, which is located in a rapidly gentrifying submarket.”