Continental bullish on multifamily, acquires Atlanta apartments for $80M

Continental Realty Corp. has bought the 345-unit, five-building Millworks complex in Atlanta. (Iran Watson 2017)

Baltimore-based Continental Realty Corp.’s purchase of an $80 million apartment complex in Atlanta’s Buckhead neighborhood reflects the firm’s continued confidence in the multifamily sector.

The firm purchased the 345-unit, five-building Millworks complex at 1888 Emery St. on behalf of the $164 million Continental Realty Fund IV L.P. The fund is focused on the acquisition of retail and multifamily in the Mid-Atlantic and Southeast. Millworks is the sixth residential property purchased for the fund and 11th acquisition overall.

“On a macro level, we have confidence in the multifamily sector. Regarding multifamily rental demand, there are favorable demographic trends particularly in the large millennial population where renting is the most common form of housing tenure. Given a consensus view that the homeownership is unlikely to change significantly, the outlook for multifamily demand remains favorable,” Ari Abramson, vice president, acquisitions at Continental, said in an emailed statement.

Demographic changes supporting the investment in multifamily, according to Abramson, are millennials moving more slowly into homeownership because of such factors as student debt load, housing affordability and limited availability of mortgage credit.

Decisions to remain in multifamily by residents ranging from young professionals to empty nesters are also being driven by lifestyle choice and not economic necessity.

“Many younger adults like the flexibility which renting offers for geographic mobility, flexibility to change residences when new job opportunities arise or when other reasons dictate intracity or intercity moves,” he said.

Millworks, according to Continental, provided an opportunity to own a property that was completed just this year at the “epicenter of activity in the downtown marketplace” at below replacement cost. The property also represents a foothold for Continental in the Atlanta market.

The complex, which consists of one-, two- and three-bedroom apartment and offers amenities like a saltwater pool, is near Georgia Tech and Piedmont Hospital. Colleges and hospitals are driving a large portion of the nation’s urban renaissance.

“Given its recent delivery, the project does not require the investment of resources for capital improvements. As a result, the fund should benefit from higher cash flow growth with a limited allocation to capital expenditures. Millworks fulfills each important acquisition criteria asset quality, demographics and the opportunity for value creation,” said J.M. Shapiro, Continental’s CEO.

The Buckhead area itself has more than 18 million square feet of office space and 14 million square feet of retail space. Effective rents in Atlanta, according to Continental, have also increased by roughly 8 percent since March.