A real estate investment company based in Boston has spent over $70 million to add a newly developed apartment complex in Chapel Hill to its regional asset portfolio.
The sale of Alexan Chapel Hill was announced on Monday, with ownership of the 265-unit residential property having been transferred from East West Partners to Berkshire Group.
According to Ben Perry, a project manager at East West Partners, the upscale community was built with outside investors in mind, but a favorable market facilitated its sale.
“We were always going to have to either bring in new investors or refinance it or a combination of that, but the market just got so strong over the year or two that we were building it that it just made sense to go ahead and sell,” he recalled.
Perry also explained that his company sought to maximize the equity of the property by partnering with Trammell Crow Residential and accepting a degree of financial risk.
“We financed that project with shorter-term capital, a construction loan and development equity investors that are looking for the higher-risk, higher-return equity-type yields,” he relayed.
The construction of Alexan Chapel Hill was made possible in part by land development regulations that have since been made less permissive by town officials.
In discussing the attraction that the property had to outside investors, Perry pointed to the availability of a ready-made capital asset that is not likely to be duplicated.
“Berkshire and some of the other markets saw that and thought that Chapel Hill continues to be a high-barrier entry market, so it just […] shows that once you get something built, the lack of supply in the market makes it valuable,” he mused.
Amenities at the complex now known as Berkshire Chapel Hill include a saltwater swimming pool and pet salon as well as 13,560 feet of retail space at ground level.
Michael Krupp, a vice president with Berkshire Group, claimed that the acquisition was part of a strategy to purchase “boutique-style communities” in “prime locations.”
That strategy may bode well for the company, which has four decades of investment experience and over $7 billion in real estate assets under management.
Image by Trammell Crow Residential.