Summit Hill at 100 Stone Hill Road in Springfield — Courtesy: KRE Group
By Joshua Burd
KRE Group and an investment partner have paid $70 million to acquire a 228-unit rental community in Springfield, marking its latest step to grow its value-add multifamily business.
The company acquired Summit Hill, a garden apartment complex at 100 Stone Hill Road, in partnership with Avenue Realty Capital. The joint venture is now planning upgrades such as interior renovations, a new clubhouse and state-of-the-art fitness center, among others.
The seller of the property was Segal & Segal. Gebroe-Hammer Associates served as the broker in the deal.
Summit Hill sits atop Baltusrol Mountain near the nexus of Interstate 78 and Route 24 in western Union County. KRE said the property’s historical average occupancy rates are in the mid to high 90 percent range.
It is the third in a series of garden apartment acquisitions totaling more than $222 million in value that KRE has completed in 15 months, comprising more than 1,065 rental units. The firm purchased Deer Creek, a 288-unit rental community in Plainsboro, for $45.5 million in February 2016 and Royal Gardens, a 550-unit rental property in Piscataway, for $107.25 million in late 2015.
The Bridgewater-based firm has plans to enhance tenant quality of life and increase the value of all three properties.
“The common thread in all three of these assets is they are well-located properties in high-demand, supply-constrained markets, and they all offer the opportunity to create value through investments in capital improvements, unit renovations and improved property management,” said Darin Raiken, director of acquisitions for The KRE Group. “We have already had considerable success implementing this strategy at Deer Creek and Royal Gardens, and we identified Summit Hill as a property with similar potential.”
KRE’s latest partner, Avenue Realty Capital, is a real estate investment firm focused on multifamily and mixed-used properties in the New York metropolitan area. Summit Hill is the 36th property funded by the firm through its equity investment platform.
“We are very pleased to joint venture with KRE as our operating partner and specifically with this investment as it fits perfectly in our value-add multifamily investment strategy in the New York Metropolitan Area,” said Steve Scioscia, co-founder of Avenue Realty Capital. “It is a valuable addition to our growing portfolio.”
At all three of its acquisitions, KRE will renovate unit interiors with new kitchen and bathroom finishes and washer and dryers, according to a news release. It is also initiating major capital improvements such as new roofs, parking and sidewalk repairs and landscaping upgrades.
“Since beginning this strategic initiative, we have deployed more than $222 million in acquisition capital and we continue to actively seek out new opportunities,” said Jonathan Kushner, president of KRE Group. “As the New Jersey rental market continues to evolve, we believe this is a component of the market that is poised for incredible growth.”
Gebroe-Hammer Executive Vice President Greg Pine and Vice President Gehane Triarsi exclusively represented the seller of Summit Hill, while Managing Director Joseph Brecher procured the buyer. The firm in 2015 also represented the seller on the $172 million sale of 1,172 garden-apartment units and an adjacent 73,394-square-foot retail center at Village Green in Mount Olive, New Jersey’s largest such sale from that year.
Since that time, Gebroe-Hammer said it has exclusively represented the seller in other sales involving 3,216 total units and 113,394 square feet of retail space, for a total value of more than $663 million in Morris, Union, Essex and Somerset counties.
“The seller, on behalf of whom Gebroe-Hammer has sold eight properties since the end of 2015, recognized the time was right to market well-located, well-occupied garden-apartment communities such as Summit Hill Apartments,” Pine said. “Today’s premium sale prices, soaring investor demand and the inexpensive cost of debt are the catalysts driving many long-time owners to capitalize on their assets.”