KEVIN Richards, CEO of Kingston Properties Limited (KPREIT), says the company has found better investment prospects in the multifamily segment of the market than in condominiums, hence its reversal of a decision made in 2019 to sell off properties in its United States portfolio and exit that market.
Last week the company announced that it had re-entered the market after inking an agreement between its wholly owned subsidiary Kingston Properties Miami LLC and US companies Apex Development Group LLC (Apex) and Treevita Holdings LLC (Treevita), to form Polaris at Camp Creek Partners LLC (Polaris).
Polaris will be acquiring, first off, a 155-unit multifamily property located at 2800 Camp Creek Parkway in Atlanta, Georgia. KPRIET states that more, in this segment, will follow.
Between 2018 and 2020 the company sold inventory including eighteen properties in Florida, all of which were condominiums. This included Midblock, comprising five units; Opera Tower where the company owned two units; West Fort Lauderdale where one unit was owned; and The Loft, where a total of 14 units were sold between 2018 and 2020
Now, the company has returned to the hard currency market in another state, Atlanta in Georgia, where Richards explains that the multifamily market is a better investment option.
Richards told the Jamaica Observer, “We have been exiting the condo market because of the volatility of the valuation of these units and relatively low income yields while switching to multifamily properties whose valuation is based on the income capitalisation model.
“Individual condo values are based on market comparables only and not a function of the income generated by the property.”
He said that Polaris, the new company under which US expansion will continue, comprises “experienced operators in both the single-family and multi family space and will be skilled. As with most commercial real estate investments, our strategy will be to seek out distressed opportunities in strong growth markets, making improvements to the properties, thereby generating higher rents [and] resulting in improved valuations”.
The first acquisition, the company points out, is a value-added opportunity. It is expected to undergo phased improvements over the next two years.
This, the company states, is expected to improve the tenant base in a market that has seen an average of 5 per cent annual rent growth.
The multifamily complex will be the first in a series of acquisitions slated to be made with both Apex and Treevita in various targeted US states, it was outlined.
The property was acquired for a consideration of US$15.5 million and was 75 per cent financed by debt while the remaining 25 per cent equity came from the partners – with KPREIT owning just under 40 per cent of that entity.