CARROLL and PGIM Real Estate Execute Portfolio Sale of More Than 3,500 Units
This Disposition Represents the Majority of the Remaining Assets from a 28-Community Acquisition in 2017
CARROLL, in partnership with PGIM Real Estate, the $209.3 billion real estate investment and financing business of Prudential Financial, Inc. (NYSE: PRU), today announced the sale of 12 multifamily communities representing 3,564 total units across Florida, North Carolina, and Tennessee for a sale price of $885.5 million. The 12 communities were part of a 2017 acquisition of a 28-community portfolio purchased as the first joint venture transaction between PGIM Real Estate’s U.S. core-plus equity strategy and CARROLL.
Included in the sale were: three Wilmington, N.C., communities (Cape Harbor by ARIUM, Clear Run by ARIUM, Mill Creek by ARIUM); three Charlotte communities (Mallard Creek by ARIUM, Northlake by ARIUM, Harris Pond by ARIUM); two Tennessee communities (Williamsburg by ARIUM, Hendersonville, Tenn., and The Club by ARIUM, Antioch, Tenn.); and four Florida communities (Heron Lake by ARIUM and The Vinyards by ARIUM in Kissimmee, Fla.; Lake Pointe by ARIUM in Melbourne, Fla.; Bay Cove by ARIUM in Clearwater, Fla.).
Purchased in 2017 as part of a 28-community workforce housing portfolio – the largest single transaction in the Firm’s history to date – these assets represented an opportunity for CARROLL and PGIM Real Estate to provide housing access to an underserved segment of the multifamily market. Strategically located within major growth MSAs, these communities were well-positioned to deliver housing opportunities in increasingly congested and expensive markets. At the time of sale, each of the communities were operating with strong occupancy and healthy growth metrics, paralleling CARROLL’s overall portfolio performance.
During its four-year hold, CARROLL and PGIM Real Estate undertook numerous sustainability initiatives to add overall value to the asset. These initiatives included investments in LED lighting to reduce energy consumption by up to 75%; and an investment in water saving devices (aerators, low-flow toilets, and eco-friendly irrigation systems) that equates to savings of more than 50 million gallons each year; and trash diversion and recycling efforts diverting tons of trash from landfills. The savings delivered by these measures was passed along to residents and has been inspiration for additional ESG-related initiatives throughout the portfolio.
The operating philosophy for the assets took advantage of the strong in-place cash flow and implemented light value-add improvements, including the addition of plank flooring on ground floor units and the installation of washers/dryers in all units with connections in addition to performing deferred maintenance programs to further preserve the life of the assets.
Across portfolio metros, Class B apartments are outperforming all other classes. Many newly constructed and higher-rent alternatives are reaching affordability limits. Moderate-income renters provide a stable revenue base, as they are less likely to move and purchase single-family homes, while having the ability to afford market rent growth. High barriers to entry exist for Class B in suburban locations due to zoning restrictions, land availability, and unattractive economics for new development (i.e. rents do not justify construction costs). At the same time, many of the new jobs being added to the Portfolio’s local economies produce moderate income. In the Portfolio’s metros, the employment growth rate has been 3.75x higher on average than the inventory growth rate for Class B properties.
“Closing out this portfolio is a major milestone for CARROLL and our investors,” said M. Patrick Carroll, Founder and CEO of CARROLL. “These properties were directly aligned with our investment strategy as part of our workforce housing platform that included an early focus on the Sun Belt region and were integral assets in the diversity of our portfolio. We were proud to partner with PGIM to deliver quality housing while maintaining our goal of improving resident life to all of these markets throughout our hold.”
“We are pleased with the value that CARROLL and PGIM Real Estate were able to add to the portfolio to improve the quality of living for the residents, while delivering an excellent outcome for our investors,” said Darin Bright, senior portfolio manager for PGIM Real Estate’s U.S. core plus strategy. “We will continue to pursue investment opportunities in the Sunbelt market where there is a clear demand for affordable housing.”
Prior to this transaction in 2022, CARROLL had executed six deals – five acquisitions and one disposition – totaling nearly $455 million in transaction volume. CARROLL continues to drive its long-term strategy of investing in Sun Belt markets and other strategic, business-friendly cities with strong population and job-growth fundamentals.
Jim Mehalso, led the portfolio transaction for PGIM Real Estate. Easley Hooff, VP of Investments led CARROLL’s efforts. Seller was represented by Eastdil Secured in this transaction.
CARROLL, a privately held real estate company, was founded in 2004. With headquarters in Atlanta, Ga., and regional offices in Dallas-Fort Worth, Raleigh, Denver, Tampa, and New York, CARROLL focuses on multifamily communities, including acquisitions, property and asset management services, ground-up development and fund management. The Firm has raised more than $4.3 billion of equity through CARROLL-sponsored funds and joint ventures. CARROLL has successfully purchased, developed, or sold more than $19.6 billion in real estate.
The company manages more than 32,257 multifamily units across nine states representing $8.3 billion in assets under management and has purchased other multifamily owner/operators throughout the U.S. CARROLL has also developed student housing, single-family residential, and retail communities, and has managed more than $500 million in construction projects throughout the past 10 years. From due diligence to execution, CARROLL has the internal capabilities and the external relationships to identify, underwrite, and close transactions. For more information, visit carrollorg.com.
About PGIM Real Estate
As one of the largest real estate managers in the world with $209.3 billion in gross assets under management and administration1, PGIM Real Estate strives to deliver exceptional outcomes for investors and borrowers through a range of real estate equity, real estate debt, agriculture and impact solutions across the risk-return spectrum. PGIM Real Estate is a business of PGIM, the $1.5 trillion global asset management business of Prudential Financial, Inc. (NYSE: PRU).
PGIM Real Estate’s rigorous risk management, seamless execution, and extensive industry insights are backed by a 50-year legacy of investing in commercial real estate, a 140-year history of real estate financing2, and the deep local expertise of professionals in 32 cities globally. Through its investment, financing, asset management, and talent management approach, PGIM Real Estate engages in practices that ignite positive environmental and social impact, while pursuing activities that strengthen communities around the world. For more information, visit pgimrealestate.com.
PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU), ranks among the top 10 largest asset managers in the world3 with $1.5 trillion in assets under management as of Dec. 31, 2021. With offices in 17 countries, PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including public fixed income, private fixed income, fundamental equity, quantitative equity, real estate and alternatives. For more information about PGIM, visit pgim.com.
Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom, or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information, visit news.prudential.com.
1. As of Dec. 31, 2021. AUM reflected as gross. Net AUM is $137.9 billion and AUA is $45.9 billion.
2. Includes legacy lending through PGIM’s parent company, Prudential Financial, Inc.
3. PGIM is the investment management business of Prudential Financial, Inc. (PFI). PFI is the 10th largest investment manager (out of 477 firms surveyed) in terms of global assets under management based on Pensions & Investments’ Top Money Managers list published on May 31, 2021. This ranking represents global assets under management by PFI as of Dec. 31, 2020.