New York, NY– June 2, 2015 – (RealEstateRama) — Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) (“BRG” or “the Company”) today announced its investment in a joint venture to develop a Class A, 285-unit apartment property in Atlanta, Georgia, to be known as the Cheshire Bridge Apartments (“Cheshire Bridge”). The luxury multifamily rental community will be set on 3.88 acres in a sought-after location adjacent to Atlanta’s Buckhead and Midtown neighborhoods. Total projected development costs are estimated at $48.2 million, or $169,000 per unit.
BRG’s underwriting projects a trended return on cost for the project of approximately 7.0% at stabilization, based on expected development cost and projected rental income. This compares very favorably to estimated market cap rates of 4.50% to 5.25% for comparable product.
BRG made a preferred equity investment of approximately $15.5 million which, in conjunction with an investment by an affiliate of Bluerock Real Estate, LLC (“Bluerock”), comprises approximately 90% of the required equity for the development. The balance of the equity was contributed by Atlanta-based Catalyst Development Partners, the Company’s development partner on the project. Under an invest-to-own structure, BRG is entitled to a current-pay preferred return on investment of 15% per year with the right, once the project is developed and stabilized, to convert its investment into a majority common membership interest.
“We believe that the Cheshire Bridge development will be strongly accretive to the REIT for multiple reasons. First, the location is highly desirable and should, in our opinion, command top rents. Additionally, we know Catalyst Partners, with whom we have partnered in the past, to be expert at delivering high quality product at a very attractive cost basis,” said Ramin Kamfar, Chairman and CEO of BRG.
Cheshire Bridge will feature studio, one-, and two-bedroom unit layouts averaging 871 square feet. Located in a highly desirable area at the intersection of Cheshire Bridge Road and I-85, the development will offer immediate access to two of Atlanta’s largest employment nodes, Buckhead and Midtown, which encompass approximately 100,000 and 86,000 employees, respectively. Buckhead and Midtown are also home to a combined 22 million square feet of retail, and a university population of approximately 20,000 students with Georgia Tech and Emory University less than three miles away.
The community will be developed with best-in-class luxury lifestyle amenities including a resort style pool, fitness center, and business and media centers. Unit interiors will be condominium quality, featuring nine-foot ceilings, high-end stainless steel appliances, granite countertops, upgraded lighting, and garden bath tubs.
About Bluerock Residential Growth REIT, Inc.
Bluerock Residential Growth REIT, Inc. (NYSE MKT: BRG) is a real estate investment trust. The Company focuses on acquiring a diversified portfolio of Class A institutional-quality apartment properties in demographically attractive growth markets to appeal to the renter by choice category. The Company’s objective is to generate value through off-market/relationship-based transactions and, at the asset level, through improvements to operations and properties. BRG generally invests with strategic regional partners, including some of the best-regarded private owner-operators in the United States, enabling the Company to operate as a local sharpshooter in each of its markets and to enhance its off-market sourcing capabilities. BRG has elected to be taxed as a real estate investment trust (REIT) for U.S. federal income tax purposes. For more information, please visit our website at: www.bluerockresidential.com.
Catalyst principals have combined over 50+ years of multifamily investment experience, and collectively have transacted over $1 billion in acquisitions and development. Catalyst was formed in 2010 and currently owns 1,800 units in six properties.