With rents rising and occupancy levels near record highs, the Triangle apartment market has become an attractive destination for an investment sector that typically hasn’t had a high profile here: Corporate housing.
The purchase was part of a joint venture between Mapletree and Oakwood, with Mapletree owning the property and Oakwood managing it.
“Raleigh-Durham is one of the top stories in the country as far as job growth, population growth, in migration from other towns, and that obviously translates well into the corporate housing space,” said John Hinkle, vice president of acquisitions for Oakwood, a Los Angeles-based company that owns or manages more than 25,000 corporate housing units globally. “Currently we see more demand than supply.”
Oakwood already rents apartments in Courtney Estates and other apartment communities throughout the Triangle. The company has a significant presence in complexes in the Brier Creek area, where its customers like the close proximity to the airport, retail and other amenities.
But the purchase of Courtney Estates is another example of how the Triangle is quickly becoming a top-tier market for global investors.
Mapletree, which is headquartered in Singapore, and Oakwood plan to invest $4 billion over the coming years purchasing or developing 50 to 100 apartment properties throughout the U.S.
Oakwood’s customers include corporations who need to relocate employees for a period of time as well as large consulting firms whose employees jump from city to city working on different projects.
Hinkle said the Triangle’s diverse economy means it has a wide range of companies with corporate housing needs.
“Everyone thinks of it as strictly a tech industry-based economy but between medicine, technology, education, government, even legal and banking, you’ve got a very diversified economy,” he said.
Mapletree and Oakwood have also recently bought properties in Dallas and Silicon Valley. Hinkle said the Triangle shares many characteristics with those markets.
“Rent growth has been some of the strongest in the country and occupancy is really at all-time highs and doesn’t really show much chance of reducing any time soon,” he said.
Courtney Estates was built in 2004. Mapletree bought the property for $44 million from a group led by J.P Morgan Investment Management, which acquired it for $34.725 million in 2006, according to Wake County property records.
The complex has been renamed Oakwood Raleigh at Brier Creek, but Hinkle said its units won’t all be used for corporate housing tenants. It will continue to house a mix of renters and corporate clients, with the exact mix varying depending on demand for the units.
“It looks and smells like a conventional apartment building except that we will furnish and service as many of the units as needed in that market space,” Hinkle said.
As for finding opportunities in a very heated apartment market, Hinkle said the joint venture is able to find deals even in a crowded market.
“We’re out there combing the market pretty much everyday trying to generate acquisition and development opportunities that will fit with the Oakwood and Mapletree model,” he said. “Obviously it is very competitive, but with our program we’re able to generate some additional return on investment that maybe another buyer can’t so we can be as competitive, if not more so, than a conventional buyer on these assets.”
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