DALLAS, TX - Milestone Apartments Real Estate Investment Trust announced that it has entered into an agreement to purchase The Manor Homes of Arborwalk, a 280-unit, Class A multifamily apartment community located in the Lee's Summit submarket of Kansas City, Missouri, for a purchase price of US$37.25 million, representing an estimated year one capitalization rate of 6.65%. The Acquisition is expected to be accretive to the REIT.
"Arborwalk is an off-market acquisition sourced for the REIT through our strong network of industry relationships. We look forward to entering the Kansas City market and further diversifying the REIT's portfolio," said Robert Landin, CEO of Milestone. "Kansas City has a population of over two million people, average household income above the national average and favourable employment and demographic trends. The supply and demand characteristics in the Lee's Summit submarket in particular are very attractive, supporting positive rental rates and stable occupancy. Importantly, we have identified opportunities to increase cash flow at Arborwalk through the implementation of Milestone's operating efficiencies and value enhancement program."
Arborwalk was built in 2006 and is currently approximately 97% occupied, with average monthly rents of approximately US$975 per unit. Consistent with the REIT's established portfolio, Arborwalk features extensive amenities including a clubhouse, business center, media room, fitness center, an outdoor pool area and extensive green space. Arborwalk is the only apartment community in the Lee's Summit submarket that offers private attached garages for all of its units.
The Lee's Summit submarket is attractive to families, attributable in part to its highly rated school system, which has earned Missouri's highest ranking for educational achievement. The Property, which has convenient access to major transportation corridors, is located within close proximity to large employment centers including the Truman Medical Center, Saint Luke's East Hospital, Sprint Corporation's headquarters, where 7,500 of its employees are located, and the US$4.45 billion Cerner Corporate Campus, currently under construction. Cerner, a major health care information technology company, is Kansas City's largest private sector employer with approximately 10,000 employees. Cerner is currently expanding its presence at this location to include 3.7 million square feet of office space that can house 16,000 employees when complete. Only six miles north of the Property is Summit Fair shopping center, a 500,000 square foot open air lifestyle center with a variety of major department stores, specialty shops and restaurants.
As part of the purchase consideration for Arborwalk, the REIT is negotiating a new, interest only, fixed-rate mortgage of approximately US$20.5 million, with the balance of the purchase price expected to be funded using the REIT's available cash and revolving line of credit. The Acquisition, which is subject to customary closing conditions, is expected to close by March 1, 2015. The REIT will disclose the final details of the purchase, including financing terms, following closing of the Acquisition.
Milestone is an unincorporated, open-ended real estate investment trust that is governed by the laws of Ontario. The REIT's portfolio consists of 59 multifamily garden-style residential properties, comprising 19,553 units that are located in 12 major metropolitan markets throughout the Southeast and Southwest United States.