(BRK.A), (BRK.B)
Berkadia, Berkshire Hathaway’s joint venture with Leucadia National Corporation, has announced the recent sale of the Parkway Apartments and Townhomes, located in West Lafayette, Indiana. Senior Director David Gaines, Senior Director Alex Blagojevich and Associate Director Chris Bruzas of the Chicago office completed the $10.85 million sale, reflecting a $24,327 per-unit price. It closed on May 9.
The seller was an affiliate of FM Capital from New York. The buyer, Abbott Properties from Kansas City, Missouri, was drawn to the property’s strong value-add potential and plans to renovate both the interior and exterior and streamline operations.
“We continue to see high demand from investors across the country for similar value-add properties, where their construction and management teams can go in and efficiently operate the properties,” said Gaines.
“Abbott Properties recognized a great opportunity to upgrade its portfolio,” added Bruzas. “In this instance, the Parkway Apartments and Townhomes is their second large property in central Indiana, and they now own and manage over 1,000 units in the area.”
Built in 1965, the 446-unit property includes studio, one-, two- and three-bedroom floor plans. Community residents also have access to amenities such as a pool and fitness center.
The Parkway Apartments and Townhomes is located at 2601 Soldiers Home Road, with convenient access to Interstate 65 and U.S. Route 52. It is three miles from Purdue University and seven miles from the Tippecanoe Mall. Top employers in the area include Purdue University, Wabash National Corporation, Evonik Industries and TRW Automotive.
In the first quarter of 2016, vacancy in the Lafayette metro market was 5.1 percent. During this period, asking rents advanced 6.4 percent year-over-year to $1,263.
About Berkadia
Founded in 2009 as a 50/50 joint venture between Berkshire Hathaway and Leucadia National Corporation, Berkadia is a third-party commercial mortgage servicer, as well as an approved lender for Fannie Mae, Freddie Mac, and HUD/FHA. The company was among the top Freddie Mac and Fannie Mae multifamily lenders for 2013.
Berkadia owes its origins to GMAC Commercial Mortgage Corporation, which was acquired in 2009 by Kohlberg Kravis Roberts & Co., Five Mile Capital Partners LLC, and Goldman Sachs Capital Partners. Christened Capmark Financial, the company had $10 billion of originations in 2008 and a servicing portfolio of more than $360 billion before running into bankruptcy in October 2009.
In a deal approved by the bankruptcy court, Capmark sold its mortgage loan and servicing to the newly formed Berkadia in a deal worth $515 million.
The deal brought Berkshire into the heart of the commercial loan serving business, and the company has one of the largest commercial real estate servicing portfolios.
© 2016 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.