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In buying the Trellis at the Lakes apartment community for $114 million earlier this month, Stoneweg US has achieved a pair of firsts.
The deal for the 688-unit multifamily rental complex on nearly 60 acres marks its first in its five-year history in St. Petersburg, where the affiliate of Swiss-based Stoneweg Group and investment manager for Varia US Properties is headquartered.
“It’s very important for us to have investments near where we live,” says Stoneweg US CEO Patrick Richard.
The acquisition also represents its first purchase with institutional partner Hartford Investment Management Co., a subsidiary of the giant Hartford Financial Services Group Inc.
For good measure, the deal represents the largest single asset purchase in Stoneweg US’s more than 60-plus asset portfolio, which contains roughly 13,000 units in all and is valued in excess of $1 billion.
“Trellis is a very unique property and a lot of people know it and of it because it’s very large and low density,” says Stoneweg US Chief Investment Officer Ryan Reyes.
“This purchase for our company is monumental.”
The acquisition also represents the sixth Stoneweg US has completed since raising $26 million in equity earlier this year to bolster the company’s portfolio.
With SW Fund I L.P., the company intends to leverage total equity to $250 million, through its own devices and that of partners, and purchase as much as $600 million worth of multifamily product throughout the U.S. utilizing mortgage loans.
Richard and Reyes anticipate the fund will ultimately acquire as many as 20 apartment communities within the next 18 months with partners such as Hartford Investment, which has more than $100 billion in assets under management.
“We plan to always be in the minority in terms of equity, in part because that will also provide a diversity of exposure for our investors,” Richard says.
Stoneweg US and Hartford Investment bought the 11401 Dr. Martin Luther King Jr. complex, which was completed in 1982 with average unit sizes of 732 square feet, from a joint venture between Admiral Capital Group and ESG Kullen.
Newmark Group Inc. Vice Chairman Patrick Dufour, along with the commercial real estate brokerage firm’s Ryan Crowley, Andrew Visnick and Pibu Aulakh represented Admiral Capital and ESG in the transaction.
Newmark Group also arranged debt financing for Stoneweg and Hartford Investment.
Admiral Capital and ESG bought Trellis at the Lakes in September 2016 for $80.85 million and began a capital campaign to upgrade the complex’s one- and two-bedroom units two years later.
Stoneweg US intends to invest about $7 million to complete the unit renovations by adding washers and dryers and other appliances, new paint and other improvements and to make additional exterior upgrades.
“We want to bring all the units up to the same, modern standard,” Richard says. “We want to make this a community where people will live, play, have their friends over — a real destination.”
Reyes says to that end Stoneweg US and new property manager Rangewater Real Estate also plan to convert outdated outdoor amenities like racquetball courts to modern uses to augment existing fitness centers, swimming pools and lakeside walking trails at Trellis at the Lakes.
He adds that the property’s proximity to employment centers — including the 432-acre Carillon Park, where Raymond James Financial is headquartered and Franklin Templeton, Allstate Insurance and others have a major presence — downtown St. Petersburg and road networks such as Interstate 275 make it especially attractive.
But while Stoneweg US is celebrating its milestone purchase, Richard and Reyes maintain that they are eager to continue executing acquisitions.
“We have a very active pipeline, and we’re really just at the beginning of what we’re planning,” Reyes says.
“We’re grateful to be in a sector that remains very active, and the fundamentals for multifamily rentals continue to be very positive,” Richard says. “So there’s more for us to do. We’re ready for more acquisitions.”
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