TH Real Estate Lends $110M for Baltimore Multifamily Property Purchase
Hirschfeld Properties and Pacific Coast Capital Partners (PCCP) have nailed down a $110 million acquisition loan from TH Real Estate to acquire a Baltimore-area apartment community called Rosemont Towson, Commercial Observer has learned.
The floating-rate loan was provided at a 73 percent loan-to-value, facilitating the joint ventures’ $134.5 million acquisition from global investment manager Investcorp, according to Jason Hernandez, a managing director and head of originations at TH Real Estate, an affiliate of global investment manager Nuveen (formerly TIAA). The deal closed on Aug. 23.
This acquisition debt shines light on TH Real Estate’s strategy for sourcing returns in the multifamily sector, staying away from competing with government agencies, which have dominated the multifamily debt space.
“[Our appetite is] driven by product and we have a very large fixed-rate portfolio,” Hernandez told Commercial Observer. “On our fixed-rate side, we have a tremendous appetite for multifamily, but agencies really compete and dominate the space. We’ve been focused on a lot of pre-stabilized multifamily that’s still in lease up and so we’ll take out those construction loans. We think it’s a good risk-adjusted return for us because agencies can’t compete there as much; it allows us the ability to gain more access to multifamily.”
Rosemont Towson—located at 6920 Donachie Road in Towson, Md., just north of Baltimore—comprises 36 buildings and 828 residential units, which are just over 90 percent occupied, according to information from TH Real Estate. The property features a 15-story mid rise apartment building that towers above the remaining 35 three- and four-story garden-style buildings located on the site. The community is situated between the Country Club of Maryland and Glendale Park and is located nearby two shopping centers that are adjacent to one another.
The joint venture sponsors are planning a broad repositioning of the apartment units as well as a renovation of the property’s common areas and amenities; one such upgrade will be the transformation of a volleyball court on the site into a dog park.
Hirschfeld Properties—which has been in business for 55 years—currently owns 2,000 multifamily units and “has increased all major performance metrics for its portfolio, including occupancy and net operating income, every year for the past ten years,” as per the firm’s website.
“The main crux of the value add is renovating the units and taking those to a higher market standard,” Hernandez said. “[Hirschfeld has around] 1,800 units in the Baltimore metro area, and they have renovated around 1,000 units. These guys have done this so many times.
“On the floating-rate side, we like seeing someone with expertise buying a [Class] B asset and improving on it,” Hernandez added. “I would say that with this deal in Baltimore, we’re seeing that profile across the country, that same dynamic with a lot of opportunity to do more.”
The property also includes a fitness center, a tennis court, an internet lounge and billiards room and a car care station, as per the property’s website. Current monthly rents at the community range from $1,000 for one bedroom apartments to $3,000 for three-bedroom units.
An official at Hirschfeld Properties did not provide comment. PCCP could not immediately be reached for comment.
Investcorp did not respond to an emailed request for comment on the deal.