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The transaction’s name is pretty fitting: Project Smile. After all, a sizable and successful deal closing in this market environment is certainly nothing to frown about.
Investcorp just closed a $323.6 million financing for five communities in the Sun Belt, also known as the “smile states,” Commercial Observer can first report.
The capitalization comprises five uncrossed, five-year fixed senior Freddie Mac loans plus $62.3 million in preferred equity from Basis Investment Group.
CBRE’s James Millon, Tom Traynor, Adam Spengler and Ryan Greer negotiated the transaction. CBRE Multifamily Capital originated the senior financing, placing it with Freddie Mac for upcoming securitization, sources said.
The collateral comprises 2,228 units across five garden-style communities: Tides at Paradise Valley and Tides at Deer Valley in Phoenix; Tides on Harwood in Dallas; and Rosemont Dunwoody and Rosemount Brook Hollow in Atlanta.
Investcorp acquired the assets for $420 million in July 2021, according to Multi-Housing News. Four out of the five properties were purchased in off-market transactions, per MHN, and the transaction represented a further underscoring of the firm’s strategic focus on industrial and residential investments — which began in 2014.
At the time of the acquisition, the firm noted the job and population growth in the portfolio markets, as well as the in-migration to Dallas and Phoenix from coastal communities experienced during the pandemic, with renters seeking lower taxes and a more affordable cost of living.
The recent recap allowed Investcorp to retire existing acquisition bridge financing on the portfolio, and also return some equity and excess liquidity back into the properties to complete its business plans for them.
Sources said that, despite the extremely challenging capital markets environment, CBRE was able to leverage Investcorp’s performance and the value it has added since the portfolio’s 2021 acquisition — along with the assets’ affordability component — to lock in senior Freddie financing and the Basis preferred equity investment.
Investcorp and CBRE officials declined to comment. Basis officials weren’t immediately available for comment.
Cathy Cunningham can be reached at ccunningham@commercialobserver.com.
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