M Patrick Carroll’s CARROLL and PGIM Real Estate Partner on Multifamily Portfolio Sale

From the editors of Exec Edge

At the end of the calendar year 2021, the commercial real estate market in the southeastern United States is showing sustained growth. In November 2021, Atlanta-based real estate investment firm CARROLL entered into another notable apartment building transaction.

On November 17, 2021, CARROLL and its partner PGIM Real Estate were due to complete the sale of a US $ 1.1 billion apartment complex portfolio in the southeastern United States. M Patrick Carroll, Founder and CEO of CARROLL, played a key role in the negotiations.

Conditions of the CARROLL-PGIM deal

Under the terms of the agreement, Miami Beach-based Starwood Capital has agreed to purchase nine garden-style apartment buildings for a total of 3,441 units. The properties are located in South Florida and North Carolina. CARROLL and PGIM acquired the properties in three transactions in 2018.

The remainder of the sale consists of the purchase of three properties in the Charleston area for a total of 680 units by an undisclosed buyer. In August 2018, CARROLL purchased these South Carolina properties from JRK Property Holdings. Each property was valued at $ 156,000 / unit or a total of $ 106 million.

The scope of the transaction includes a property valuation of a little less than $ 270,000 per unit. This valuation results in a total purchase price of over $ 900 million for Starwood. Newmark acted as broker for the Florida real estate business. There is no evidence that CARROLL and PGIM hired a broker for the real estate transaction in the Carolinas.

Taken together, these deals illustrate investor optimism in the marketplace and a strong desire to participate in large-scale multi-family transactions. Strong market fundamentals and reduced interest rates are driving these moves.

M Patrick Carroll from CARROLL shares strategic insights

M Patrick Carroll, CARROLL’s founder and chief executive officer, noted that the recently sold properties were acquired as a key component of the company’s value-adding workforce accommodation strategy. This innovative goal is the acquisition of real estate in high-growth metropolitan regions.

The story goes on

CARROLL invested nearly $ 22 million to renovate the interiors of numerous units. During the due diligence phase of the transaction, investors were cautioned that buyers could further increase their cash flow by making additional upgrades to certain apartments along with the common areas.

The background to Starwood Capital Properties

Starwood Capital’s new multi-family houses in the southeast each contribute to a growing metropolitan market. Together, these apartment buildings meet the housing needs of a diverse tenant population.

South Florida Real Estate

Starwood Capital’s South Florida properties total 1,150 units. Together, the properties are an important part of a portfolio of four properties acquired in April 2018 for USD 210,000 / unit or a total of USD 338.8 million. A three-company partnership consisting of Greystar Real Estate Partners, Goldman Sachs and Ivanhoe Cambridge sold the portfolio.

North Carolina real estate

Starwood Capital’s North Carolina component consists of six properties in the Raleigh-Durham area with 2,291 units. In November 2018, CARROLL and PGIM purchased the Raleigh-Durham properties from Lone Star Funds. These properties made up the majority of a 2,883-unit portfolio that the investment partners purchased for $ 141,000 per unit, or a total of $ 407.5 million.

Starwood acquires additional apartments

Starwood Capital made numerous purchases and sales of apartment buildings in 2021. To illustrate, Starwood Real Estate Income Trust, the shop’s unlisted REIT, recently made a major acquisition.

In November 2021, The Starwood REIT completed the purchase of 15,460 units from San Diego’s Strata Equity. This $ 3.65 billion southeast market transaction comprised 62 apartment buildings in 27 metropolitan markets in 10 states. Each property was valued at $ 236,000 / unit.

As an illustration, Starwood Capital reported net operating income of $ 145.6 million. The company’s initial annual return is a little less than 4%.

M Patrick Carroll highlights recent suburban migration

Patrick Carroll, M at CARROLL, is a savvy real estate investor who constantly tracks economic trends and market fundamentals. In certain cases, he has followed a particular market for years before identifying an attractive investment opportunity.

In 2021, according to Carroll, the US economy will be in a state of flux after the pandemic. The housing market trends in particular reflect this reorganization of the lifestyle indicators.

To explain this, M Patrick Carroll points out consumer preferences in the housing market after the Great Recession. Many people moved to the urban centers, attracted by the convenience and convenience of the metropolitan areas. Market-savvy investors took advantage of the opportunities in backward suburban real estate.

The housing market continues to develop

Today consumers are going in the opposite direction. Many residents continue to leave crowded cities and move to suburban areas with accessible green spaces and more affordable living costs.

However, these discerning consumers still want many of the benefits and conveniences of city living. In particular, maintenance-free living, walk-in amenities and easy access to large outdoor areas are at the top of the list. Remote employees are looking for a home with an updated WLAN infrastructure and enough space for a dedicated home office.

Most apartment buildings can easily meet these requirements. Investors with older residential communities can level the playing field by devoting resources to interior and exterior renovations and landscaping. The improvement in electronic infrastructure will attract residents who are accustomed to technology-assisted living spaces that meet their lifestyle demands.

About M Patrick Carroll

M Patrick Carroll, CARROLL’s dynamic founder and CEO, is the driving force behind the company’s success in the real estate investment industry. As a hugely successful investor, Carroll often works with strategic partners, institutional investors, brokers and lenders. He also works with local management teams to improve the results delivered and maximize investor returns.

Under the leadership of M. Patrick Carroll, CARROLL has made numerous targeted acquisitions. In addition, he managed the sale of over 88 properties if specified return targets were achieved. In total, the CARROLL divestments have generated $ 4.2 billion in sales revenue to date. This number corresponds to an average gross internal return (IRR) of 26%.

An impressive property development

M Patrick Carroll’s exemplary accomplishments in commercial real estate are the result of strong leadership and continued hard work. While working in Atlanta in his early twenties, he developed the vision of his own successful real estate business. With the support of proven business leaders, he prepared the establishment of CARROLL, a real estate investment company that reflected his bold ambition.

In 2004, CARROLL conducted its first real estate transaction, a condominium funded by a 100 percent mortgage. After successfully flipping these and other properties, Carroll branched out into home building.

Using the profits from the development and sale of a 150 unit parish, 27 year old M. Patrick Carroll bought three property management companies. This company marked his entry into the apartment building industry. A year later, CARROLL was managing 20,000 units across the United States.

Initially, M Patrick Carroll focused on the Florida and Georgia apartment building markets. However, market indicators showed that the larger southeast market offered good investment potential. This prompted Carroll to add real estate in South Carolina and North Carolina to CARROLL’s investment portfolio.

About CARROLL

Atlanta-based CARROLL is a leading commercial real estate company in the United States. Under the direction of M. Patrick Carroll, the company has acquired over $ 7.6 billion in assets and sold more than $ 4.2 billion. Since CARROLL was founded in 2004, the company has taken on the supervision of real estate worth over US $ 200 million for its clients, private investors and various institutional partners.

In 2021, CARROLL has over $ 5 billion in assets under management. The company also owns over 30,000 commercial and residential properties along the east coast of the United States. The company has an entrepreneurial culture and also has a deep in-house pool of world-class market analysis and execution experts.

Taken together, these attributes enable CARROLL to assert itself in the highly competitive commercial real estate industry. With the boundless determination and determined leadership of real estate expert M Patrick Carroll, the company is well positioned to continue its impressive market performance.