Manhattan Beach-based Magma Equities has closed on an apartment building in North Carolina for $50 million.
It is the company’s fifth investment in the state in the last 14 months.
The property, known as Independence Park, has 312 units.
Magma started looking at the site prior to the Covid-19 outbreak and secured financing ahead of the pandemic.
The company kept the agreed upon purchase price despite the uncertain economic situation.
“As active buyers in the region, we were able to source the opportunity off-market and avoid the competitive bidding process. As a result, we were very comfortable with the price as negotiated,” Magma Chief Financial Officer Michael Wagar said in a statement. “This was a very good deal for us in January and a very good deal for us now. Despite the current challenges, we expect it to perform well over the long term.”
But that doesn’t mean the coronavirus had no impact on the deal.
“In the midst of Covid-19, we stress tested the Independence acquisition differently than when we first approached it and were able to work with all parties involved to get the transaction done,” Magma Principal Robert Murray said in a statement.
Magma is suspending its renovation plans for the Independence. The property was built in 2009 and has a mix of one-, two- and three-bedroom units. It was 96% occupied at the time the deal closed, Wagar said.
The site is 23 acres and has a pool, fitness center, clubhouse, tennis court, dog park and theater.
Murray added that the asset’s location, near downtown Durham, Research Triangle Park, Duke Regional Hospital and a charter school made it desirable.
Debt for the deal was provided by Federal Home Loan Mortgage Corp., also known as Freddie Mac.
Magma is focused on Class B apartment communities.
Multifamily assets are expected to fare better than some other asset classes post-Covid.
Real estate as a whole is expected to take 12 to 30 months to rebound, according to CBRE Group Inc. The multifamily sector is expected to take more than 18 months to recover, but retail and hotel properties may take up to 30 months, according to CBRE.
