KPREIT extends Atlanta footprint with partner Apex
Published:Sunday | July 17, 2022 | 12:08 AM
Kingston Properties Limited, KPREIT, and a foreign partner have acquired another property in the competitive American market under a US$12.7 million deal.
To execute the transaction, KPREIT, through wholly owned subsidiary Kingston Properties Miami LLC, entered into another partnership agreement with Apex Development Group LLC to form Polaris at East Point Partners LLC or Polaris EP.
On July 13, Polaris EP closed the acquisition of a 118-unit multi-family property located in East Point, Atlanta, Georgia.
NEW ASSET
Kingston Properties said the US$12.7 million deal was financed by the partners’ debt and equity, and it holds a 45 per cent stake in the new asset. CEO Kevin Richards says the property will be upgraded through phased improvements over the next two years. The aim, he says, is to improve the tenant base in a market that continues to see average annual rent growth of approximately 7.5 per cent for apartment units.
Richards says the current purchase complements the company’s ‘value-added’ strategy.
“This is perfectly so, because all of these properties are older ones where we go in and rehabilitate, increase rents and change the tenant base if necessary,” Richards says, noting that last year’s property acquisition at Camp Creek in Atlanta was already yielding rents that were 10 per cent above projections.
The partners now hold 273 units in total in Atlanta, with more acquisitions pending, Richards says.
The goal is to acquire 1,000 units by 2024, with targeted markets extending beyond Georgia to North Carolina and Florida. However, Richards said the deals may not all involve Polaris EP, but would utilise other partnerships.
Asked whether the company had dodged a bullet by closing the deal before the impending increase in interest rates in the United States that might be by as much as a percentage point, Richards told the Financial Gleaner that on the contrary his company benefits from the tightening by the Federal Reserve, the central bank of the United States, as there is a greater tendency to rent in the face of high interest rates. The previous rate hike in mid-June was by 0.75 percentage point.
Rent is seen as a cheaper option to acquiring more expensive mortgages.
“That’s why the rental market is so strong. So this is perfect for our multi-family prospects .... absolutely perfect,” he said.
For the first quarter ended March 2022, Kingston Properties reported rental income of US$797,770, a 12 per cent improvement year on year, while profit rose from over $623,300 to US$716,300.