From left: The Kislak Co. Inc. has brokered the sale of 115 garden apartments in Newton, including Swartswood Gardens at 4-20 Swartswood Road, Stonewood Apartments at 31 Paterson Ave. and Mill Street Manor at 4 Mill St. and 10-16 Hillside Terrace — Courtesy: Kislak
By Joshua Burd
An investment firm has sold a three-property, 115-unit apartment portfolio in Sussex County for more than $22 million, in a newly announced deal by The Kislak Co. Inc.
According to the brokerage firm, which represented affiliates of Red Knight Properties, the transaction spanned three garden-style complexes in Newton, the largest of which was a 51-unit property known as Mill Street Manor at 4 Mill St. and 10-16 Hillside Terrace. The portfolio also includes Swartswood Gardens at 4-20 Swartswood Road and Stonewood Apartments at 31 Paterson Ave., with each comprising 32 units.
A longtime Kislak client, whose name was not disclosed, acquired the properties for $22.45 million as part of a Section 1031 like-kind exchange. They were fully occupied at the time of closing.
“What made this transaction so appealing to the purchaser was the nearly $16 million in assumable financing,” Kislak’s Joseph Keenan said. “The seller had put the debt on the property about 1.5 years ago at a rate that is much lower than what the purchaser could have obtained today. As a result, we were able to obtain record setting pricing in a rising interest rate market.”
Keenan and Justin Lupo, both senior vice presidents, marketed the properties on behalf of entities listed as Red Knight Properties Newton 2A LLC, Red Knight Properties Newton 2 LLC and Red Knight Properties Newton MS-HS LLC. They said the deal represents the highest price ever achieved for multifamily properties in Sussex County, citing data available from CoStar.
The transaction also comes after Keenan and Lupo brokered the sale of Swartswood Gardens and Stonewood Apartments to the sellers in 2020, according to a news release. Keenan also arranged a sale of the same properties in 2016.
“In an extremely volatile interest rate environment, the assumable in-place debt provided tremendous value to both the seller and purchaser,” Lupo said. “It allowed the seller to achieve ultra-competitive pricing while avoiding prepayment penalties on the loan. The purchaser was also able to hit an attractive yield level to put their 1031 exchange money to work.”
In announcing the deal, Kislak said rents within the portfolio are well below-market, creating significant upside. Additionally, the Newton and Sussex County market has experienced rapid growth over the past several years and is seeing an influx of new renters interested in newly renovated apartments.
