TORONTO, Dec. 27, 2012 /CNW/ - Timbercreek Asset Management Inc. ("Timbercreek" or the "Manager") is pleased to announce that on behalf of Timbercreek U.S. Multi-Residential Opportunity Fund #1 (the "Fund"), a joint venture between Timbercreek and Elco Landmark Residential ("Elco Landmark"), it has completed the acquisition of 1,380 residential units across four multi-residential properties (the "Acquisition") located in Austin, Texas, Charlottesville, Virginia, Charlotte, North Carolina and Chapel Hill, North Carolina, for a approximately $95.4 million. The Acquisition is the first for the Fund since the completion of its initial public offering on October 25, 2012 (the "IPO").
"We are very excited about this inaugural acquisition for the Fund," said Corrado Russo, Managing Director, Investments at Timbercreek Asset Management. "The properties not only meet the targeted investment mandates for the Fund, but also provide the Fund with diversification across different markets within our target regions in the Southeastern United States."
The purchase price of approximately $95.4 million was satisfied with a new 10-year mortgage of approximately $71.5 million with an approximate interest rate of 3.75% and the balance from cash held by the Fund. The cash portion represents approximately 85% of the net proceeds of the IPO. The Fund, which is focused on acquiring multifamily assets located in the Southeastern United States at an advantageous price and significant discount to replacement cost, is sponsored and managed by Timbercreek and operated by Elco Landmark.
The Fund's primary focus is on enhancing the value of the assets it acquires by:
- implementing a professional active management strategy to stabilize the assets and increase their operating revenue by leveraging Elco Landmark's existing property management resources, experience and expertise; and,
- renovating the assets to: reposition them into a higher market in order to reduce vacancy rates and increase overall revenue.
"We are pleased to partner with Timbercreek to acquire four quality multifamily assets that offer considerable unrealized cash flow potential," said Joseph Lubeck, CEO of Elco Landmark Residential. "Elco Landmark has an impressive history of unlocking embedded value by implementing our proven renovation and repositioning strategy. We believe the Colonial portfolio is a prime investment opportunity."
The total return objective of the Fund is to generate a 15 percent internal rate of return (or average annualized total rate of return) on a pre-tax basis and net of all fees and expenses, including a quarterly distribution with an annualized yield of 4 percent to 5 percent (which includes the allocation to Unitholders of U.S. taxes paid by the Fund).
Timbercreek is a specialized investment manager focused on real estate and other alternative asset classes. Timbercreek has a value oriented investment philosophy with an active management style, and specializes in providing conservatively managed, risk adverse investment opportunities. Timbercreek currently manages approximately $3 billion in assets through its various private and public funds, predominately focused on the real estate sector.
About Elco Landmark Residential:
Elco Landmark Residential is a real estate investment firm that owns interests in and operates 49 multifamily properties containing 15,175 units located throughout the Southeastern United States. The company aims to unlock hidden value and unrealized cash flow through the below market acquisition and repositioning of mid-income multifamily properties in the South, where the management team has proven expertise and a competitive advantage. Elco Landmark Residential is headquartered in Tampa, FL and is a member of The ELCO Holdings family of companies.
SOURCE: Timbercreek U.S. Multi-Residential Opportunity Fund #1
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Timbercreek Asset Management Inc.