Steadfast Apartment REIT Enters Georgia with 696-Unit Acquisition in Suburban Atlanta

By Barbra Murray, Contributing Editor

Steadfast Apartment REIT has added 696 residential units to its holdings in one fell swoop, and made its entrée into a fourth state. The REIT acquired a two-property apartment community in the suburban Atlanta town of Suwanee, Ga., from AMLI Residential Properties for $98.5 million.

Sited on 86 acres at 4021 McGinnis Ferry Road, roughly 30 miles outside of Atlanta, was built in two phases, with the first segment reaching completion in 1998 with 18 residential buildings, and the second phase delivering 22 residential structures in 2002. Today, the property is 97 percent leased.

McGinnis Ferry’s location within the Atlanta-area market fits the REIT’s acquisition criteria like a glove. “We focus on markets that rank highly in multiple areas, including population growth, vacancy rate, job growth, growing renter households and expected new supply against projected demand,” Ella Neyland, president of Steadfast Apartment REIT, told Commercial Property Executive. That describes metropolitan Atlanta.

According to statistics from apartment market research firm Axiometrics, Atlanta is the sixth-hottest apartment market in the country, following San Francisco. As of the close of the third quarter, the year-over-year vacancy rate in metro Atlanta had increased from  approximately 93.6 percent to 94.3 percent; annual effective rent growth jumped from roughly 5 percent to 7.8 percent; and  revenue growth went from 6.2 percent to 8.6 percent. Also, as noted in a report by commercial real estate services firm Cushman & Wakefield Inc., Atlanta’s population growth continues to exceed that of the U.S. and is on track to grow at an average rate of 1.9 percent over the next five years. The job market is also faring relatively well. “Over the long haul, employment growth in Atlanta will outshine most other metros areas as the low cost of living and competitive business costs fuel strong population gains, together with a healthy number of corporate relocations and expansions,” per the C&W report.

Steadfast financed the acquisition of McGinnis Ferry with proceeds from its initial public offering of $1.1 billion in common stock, which commenced in late December 2013, and an approximately $73.6 million loan from Berkadia Commercial Mortgage L.L.C. The REIT will invest in strategic interior upgrades to both properties under its value enhancement strategy, and operate the assets jointly as The Residences on McGinnis Ferry.

With its latest purchase, Steadfast now owns a portfolio of 1,743 apartment units in four states: Indiana, and in the South, Georgia, Tennessee and Texas. “While (our acquisition criteria) provides us with a wide swath of possible markets across the U.S., many of the markets that we are finding the most opportunity in today are in the central and southern parts of the country,” Neyland noted.

Still, the country is Steadfast’s playground. And with the one-year mark of its IPO fast approaching, the REIT is right where it wants to be, according to Neyland.  “We are very pleased with our achievements to date,” she said. “There is definitely an art to trying to match the acquisitions pace to the fundraising pace, and I think our team has done an exceptional job of nurturing a robust pipeline that has allowed us to capitalize on some great opportunities for the benefit of our shareholders.”