Collins enters Knoxville market with $60M buy.
CB Richard Ellis' Kevin Geiger brokered the 1,166-unit deal with GE Capital providing financing.
The five garden apartment communities are Collins' first venture into the Knoxville market, having concentrated heavily last quarter on Alabama and Georgia acquisitions. Atlanta-based Wilkinson Properties was the seller in the deal.
"We feel very positively about entering the Knoxville market, this is an exciting place to live," remarked Parnes. "All of these properties are located in the best locations on the west side of town, the main growth corridor. These are underperforming assets."
Vice president of acquisitions Jay Herman added, "There are two things which make a recession proof economy--government and universities. While these are not 'college properties,' The University of Tennessee at Knoxville is an anchor which will drive this market for the foreseeable future."
The University of Tennessee at Knoxville is one of the largest public universities in the region, with a total enrollment of 26,100, employing over 8,000 mostly tenured faculty and staff, and with over $130 million in research endowment funding.
Parnes plans improving the properties to bring them into a competitive position in the market and the firm has set aside $3 million for capital upgrades.
"Rents are as much as $100 below market rents in comparable properties simply because some of these assets have not been upgraded, and we seek to counteract that," Parnes continued. "This is a market with 95% occupancy and just by doing these cosmetic upgrades, we could see immediate rent growth up to 20%," Parnes added.
Last year, Collins added over $400 million worth of real estate to its portfolio, which now stands at 10 million square feet and over 12,000 units.
Acquisition activity was concentrated on the Southeast, but with this entry into such a stable market as Knoxville, Collins stands poised to expand further into the region, Parnes added.
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|Title Annotation:||NATIONAL ROUND-UP|
|Publication:||Real Estate Weekly|
|Date:||Jan 17, 2007|
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