Plymouth Meeting, PA — Pennsylvania-based 5 Cap Realty LLC (5 Cap) and its affiliate RREIC Advisors has teamed with a private equity fund vehicle managed by JMP Asset Management LLC, an affiliate of publicly traded JMP Group LLC, to launch a multi-year national investment venture that could top $1 billion in assets under management. The venture will focus on acquiring and operating value-add multifamily assets that can be renovated, leased, and managed to create superior risk-adjusted returns.
This new partnership has closed on its first two acquisitions: an apartment community in the Philadelphia metro area and another in greater Atlanta, with a total of 446 units, for a total cost of just under $60 million.
“This is a great opportunity at a pivotal time,” said David Reiner, RREIC Advisors’ managing director. “There are a lot of undermanaged assets in the marketplace. Our team has demonstrated throughout its history that we can identify these assets and reposition them with better management, marketing, and capital improvements. Our plan is to build a billion-dollar multifamily investment platform. Over the next five years, we are targeting the acquisition of ten properties per year, each with 200-300 units, focusing on the nation’s top 50-60 markets.”
The Philadelphia area acquisition, Summer Chase, is located about 28 miles from Center City in Limerick, PA. The property has 198 large multifamily apartments, all with direct-access one- or two-car garages. The property was acquired for $36.3 million ($183,333 per unit) from an institutional seller. The new ownership plans to invest $2.5 million in renovations including kitchens, bathroom fixtures, and HVAC systems. Freddie Mac provided the debt financing.
The Georgia acquisition, Grove Mountain Park, is situated about 18 miles from downtown Atlanta, and was acquired for $21.6 million ($81,000 per unit). Its 13 garden-style buildings offer a diverse unit mix of studio and one- to three-bedroom apartments. The venture plans to invest $3.15 million in renovations to common areas and individual residences. Debt financing was provided by Fannie Mae.
5 Cap affiliate Forty Two LLC (Forty2), a multifamily property management, development, and consulting firm, will manage all of the JV’s acquisitions. Forty2 managed Grove Mountain Park prior to the acquisition and is taking over management of Summer Chase.