Multifamily Dive
By Leslie Shaver
May 23, 2022

In an environment where apartment investors have been circling Southeastern metros, Northland stands out for its focus on Atlanta.

Since 2020, the Newton, Massachusetts-based national real estate private equity firm has acquired 1,300 apartments, totaling $270 million, and $250 million in land for future development in Georgia.

Atlanta “has a tremendous story with varying industries growing there at a rapid pace since the global financial crisis, a diverse economy, a diverse population and the continued inward migration from nearby states and other high-cost jurisdictions,” said Mike Campbell, Northland’s associate vice president of investments. “It has set itself apart as one of the top destinations in the Southeast.”

But Northland — which ranked No. 47 with 25,519 units on the most recent National Multifamily Housing Council Top 50 — has its sights set beyond just Atlanta and the Southeast. It also owns properties in Texas, New Mexico, Arizona, Colorado, Connecticut and Massachusetts, including a large development project in its hometown.

Here, Campbell talks with Multifamily Dive about overbuilding, the hunt for yield and where cap rates are going.

This interview has been edited for brevity and clarity.

MULTIFAMILY DIVE: For years, the Southeastern markets were considered commodity metros that could easily be overbuilt. Has something changed there, structurally, to make that less of a concern?

Mike Campbell: Houston would be a great example of a market that does concern us in terms of oversupply. In Dallas, we have similar beliefs. Specifically, in Houston, there’s no zoning code. You can build wherever you want, wherever you want.

Atlanta has taken a very pragmatic and thoughtful approach to how things get approved and how it’s developing neighborhoods. Working within metros like that is more of our focus. As operators throughout the U.S., we know the number one thing that will slow down rents is development.

Has the transaction market cooled at all recently?

The biggest thing we’re seeing is that brokers aren’t blowing through their guidance the same way that they were for the last 18 months. Deals that were running 10% to 15% over their asking guidance are coming in at like 3% to 5% below guidance, but it’s still within their ranges.

It also varies by product type. Some of the core class A stuff has fared better because a lot of those buyers are the same buyers that were always there. They weren’t chasing short-term flips and high-yield value-add projects.

So, for companies that are buying on a basis play and looking at the cost per unit or cost per square foot, it might be light compared to where we were in Q4 2021. But that’s still 30% over 2019. So when you put it into perspective, it’s not like we’ve seen a dramatic correction from the massive price run-up through the pandemic.

Have cap rates been moving up?

There was a point in time last year where we were seeing a lot of trades in the low to mid threes. And now I’d say they are probably mid threes to high fours on average. But trying to find a four is still pretty tough just because of the competitive nature of core product. It’s very low-leverage borrowers who are looking at that. They’re not as impacted by the interest rates hitting them. We’ve seen better pricing and a lot of adjustments across the market on the value-add space.

The Southeast has been hot. Are the other regions you’re in just as competitive?

Through last year, the competition was pretty aggressive everywhere — even in the Midwest. One of the things that we found as we started to look through the Midwest was that many buyers who were either coastal buyers or who used to invest either in the Southeast, Southwest or Mountain States were getting priced out of those areas and starting to look towards the Midwestern states.

We saw large institutional groups in Kansas City, Missouri; Minneapolis; Madison, Wisconsin or Milwaukee, Wisconsin. We were seeing these groups that we regularly saw throughout Texas and Florida in the prior year. It seems like a lot of groups of our size and investment scope started trying to go where there would be a bit more yield. Even in Kansas City, we’ve seen deals trading for sub-four caps.

How did you adjust?

There came a point in time when we started to refocus and pick our markets very carefully because there was almost no pricing spread for risk between markets. That’s how we started to pivot and allocate more towards Atlanta because it is a stable Southeastern market that we believe in for the very long term.

Rochester, Minnesota, [another place Northland recently made a purchase] is anchored by the Mayo Clinic. The likelihood of them shutting down and leaving that market is incredibly low. In the Northeast, we’re typically developing because it’s where we’re based and where we got our start. But we’re looking at contrarian plays out as far west as California — in the Bay Area and at areas that haven’t recovered fully.

The post Northland zeros in on the Atlanta market appeared first on Northland.

ATLANTA, GA (January 24, 2022) – Northland announced the acquisitions of SLX Atlanta, a 306-unit luxury mid-rise apartment community located in Chamblee, and a four-parcel 0.76 acre high-rise development site located at the corner of 17^th and Spring streets in Midtown. These acquisitions bolster a long-term commitment by the firm to continue to build, own, and invest in the state of Georgia and specifically, the greater Atlanta area. The purchases add to Northland’s rapidly growing list of multifamily properties since entering the state in 2020, which include Glenn Perimeter, The Sutton and The Lofts at Zebulon.

“We are excited to welcome SLX into our portfolio and to have secured the most compelling remaining development site in Midtown Atlanta,” said Matthew Gottesdiener, Chief Executive Officer. “Our investing horizon at Northland is fifty years, and we believe Atlanta’s current nation-leading growth trajectory is just getting started. In only thirteen months during a challenging investment climate, we are grateful to have solidified one of the highest quality multifamily portfolios in the city, with anchor assets in Sandy Springs, Chamblee, and Buckhead, and a Midtown site that will enable Northland’s development platform to deliver much-needed housing to the city.”

SLX Atlanta is a luxury mid-rise property located in Chamblee, offering 306 luxury apartments and 24,189 square feet of wellness-focused retail space. In a market pervaded by value-engineered commodity and mid-rise construction, SLX provides a rare differentiation. First, SLX boasts condo-quality interior finishes with bespoke over-sized floorplans, 9’4” ceilings, Pella slide patio doors, smart-home technology and gas ranges. Outside of its apartment homes, SLX’s amenities are peerless across Atlanta, providing residents with access to a resort-style pool with private cabanas, a rooftop lounge, soundstage, resident clubroom, cutting edge fitness center, work-from-home private and open-plan office spaces, a dog park, and vibrant retail space that will provide leading wellness services to its residents.

17th and Spring represents the most compelling multifamily development site in Midtown Atlanta today. The site is in the heart of Midtown, surrounded by nearly 30 million square feet of office space that is either existing, under construction or proposed. 17^th and Spring is also directly adjacent to Midtown Union, a dynamic mixed-use project currently under construction that will bring 32,000 square feet of retail to the development’s front door. Northland will design, entitle, capitalize, and develop the project without joint venture partners, and its vision for the site is a generational multifamily-anchored high-rise tower, activated by engaging street level retail.

Santo Dettore, Director of Development at Northland, who will lead the upcoming 17th and Spring development project said, “This site represents one of the few generational opportunities nationally to create an iconic example of thoughtful urban placemaking through a dynamic housing and retail mixed-use development. Atlanta’s incredibly exciting North Midtown neighborhood exemplifies the perfect ecosystem to execute on this vision.”

These acquisitions come one year after Northland Chairman Larry Gottesdiener and President and COO Suzanne Abair furthered the organization’s commitment to Atlanta by teaming up with former All-Star Renee Montgomery to become the new owners of the WNBA’s Atlanta Dream. Together, Larry, Suzanne and Renee have cultivated a new chapter for the franchise, which was awarded ESPN’s Humanitarian Team of the Year award for their heroic social justice work in 2020. Most recently, the team has built an outstanding leadership group in the front office and on the court that includes General Manager Dan Padover, President Morgan Shaw Parker and Head Coach Tanisha Wright.

Northland owns and operates a diversified multifamily portfolio that includes more than 26,000 units across the U.S. These acquisitions add to Northland’s portfolio of long-term markets within New England, Austin, and Southwestern and Southeastern United States.

The post Northland Acquires SLX Chamblee and Midtown Atlanta Development Site, Cementing Long-Term Commitment to the City appeared first on Northland.

The post Opinion: Why we bought the WNBA’s Atlanta Dream appeared first on Northland.

Northland Investment Corp. closed on a 320-unit apartment complex near Atlanta’s Pill Hill for its first investment in the city and its second in the state.

The real estate private equity firm out of Massachusetts paid $90.55 million for Novel Perimeter, a luxury apartment building completed in 2018 at 5755 Glenridge Drive. Northland acquired the property from Crescent Communities and Bluerock Residential Growth REIT, with the deal coming out to nearly $283,000 per unit.

Crescent developed the high-end property at the Interstate 285 and state Route 400 interchange minutes northwest of Pill Hill, Atlanta’s premier health care hub that hosts the highest concentration of medical health care providers in Georgia. The property is also located close to the Central Perimeter business district and in proximity to several large corporate campuses including the U.S. headquarters of Mercedes-Benz.

Novel Perimeter sold quickly after having only been on the market for about 45 days, Kyle Brock, managing director with Crescent, told CoStar. The selling venture had initially intended to bring the property to market earlier in the year, though plans were delayed due to the onset of the coronavirus pandemic. The sellers ultimately listed the property after market and property fundamentals proved resilient amid the ongoing public health crisis.

Crescent and Bluestone completed lease-up at Novel Perimeter in September, with the property stable at approximately 91% leased since that time, Brock said.

This acquisition marks the first in Atlanta for Northland, which highlighted the area’s demographics and the property’s top-of-market amenities as primary motivators behind the purchase. Novel Perimeter offers one- to three-bedroom units and sports a 2,500-square-foot gym with a dedicated yoga and spin room, a saltwater pool, coffee bar and a tanning shelf and cabanas.

Northland closed on its first apartment investment in Georgia earlier this year with the $41.4 million purchase of Lofts at Zebulon in Macon, a city located roughly 85 miles southeast of Atlanta. Northland owns and operates more than 25,000 apartment units across the country.

For the Record
Chris Goldsmith and Patrick Jones of Walker & Dunlop represented the selling venture in negotiations. CBRE Multifamily Capital provided $64.33 million in acquisition financing to the buyer.

For more detailed information on this transaction, please refer to CoStar COMPS #5314493.

The post Northland Breaks Into Atlanta Apartment Market With Deal Near Pill Hill appeared first on Northland.

A Boston multifamily investor has made its first foray into Atlanta and plans to buy up metro units over the next few years.

Northland Investment Corp. purchased Novel Perimeter, a 320-unit luxury apartment complex off Glenridge Drive overlooking Georgia 400 in Sandy Springs, for $90.5M earlier this month, according to Databank, which tracks real estate transactions.

Crescent Communities developed Novel Perimeter in 2016 and sold it to Northland, which owns more than 80 apartment and commercial properties in the South, Southeast and Northeast.

It has been eyeing the Atlanta market for two years before this purchase, Northland Chief Investment Officer Matthew Gottesdiener said. The firm hopes to acquire at least 2,000 units in the metro area over the next few years, including high-rise luxury apartments inside the city.

“In Tampa, Denver, Orlando, we own downtown vertical assets,” Gottesdiener said. “And that will be in our future in Atlanta, too.” Northland targets stabilized Class-A apartment assets as well as value-add properties that require a significant capital infusion to reposition, he said. He didn’t identify any other Metro Atlanta properties the firm is currently considering, but said that ground-up development — which it mainly does in the Northeast — is also a possibility in Atlanta.

Given Northland’s typical hold time of at least 20 years, the firm sees Atlanta as a promising growth engine, especially with its burgeoning technology sector that Gottesdiener likened to Austin 15 years ago. Austin was recently ranked as the sixth-most-populous city with tech talent in the U.S. by CBRE in its 2020 Tech Talent Report, behind New York and Toronto. Atlanta was ranked ninth.

“The increasing number of graduates choosing to stay in town to me is a powerful and encouraging indication,” he said.

The post New England Investor Makes First Atlanta Apartment Buy With 2,000-Unit Goal appeared first on Northland.

ATLANTA, GA (December 15, 2020) – Northland Investment Corporation today announced the acquisition of Novel Perimeter, a best-in-class luxury multifamily residential property that features 320 thoughtfully-designed one- to three-bedroom homes, as well as a suite of high-end amenities. This acquisition represents Northland’s entrance into the competitive and highly desirable Atlanta market.

“Novel Perimeter is a significant acquisition for Northland; we are excited to expand our ownership in Georgia and to enter Atlanta, one of the most dynamic and economically vibrant markets in the US,” said Matthew Gottesdiener, Chief Investment Officer at Northland. “The property is a trophy asset that offers an exceptional transit-oriented residential experience through its luxury amenities and prime location at the doorstep of Atlanta’s largest white-collar employment hub. We are excited to introduce Northland’s best-in-class operations and long-term committed ownership to Atlanta, and to welcome this city to the growing list of core Northland markets: Boston, Austin, Denver, Charlotte, Charleston, Orlando, Tampa/Sarasota, Fort Myers, Palm Beach County, Tucson, and Albuquerque/Santa Fe.”

Novel Perimeter is ideally located just steps from both the Perimeter business district, one of the country’s largest employment hubs for Fortune 500 companies, and “Pill Hill,” the largest aggregation of healthcare in the state, comprised of three world class medical facilities. Coupled with its Sandy Springs address, Novel’s unique location offers residents an unparalleled combination of proximity to Atlanta’s best jobs and amenities, and a top ranked school system in one of the most prized suburbs in the city.

Residents will also enjoy a full suite of top-tier amenities. Novel Perimeter offers a 2,500-square-foot gym featuring cutting-edge Technogym equipment and a dedicated yoga and spin room; a modern drop-in work space with a boutique coffee bar featuring Land of a Thousand Hills coffee; a well-maintained outdoor dog run and pet washing area; and thoughtful, flexible workspaces designed to keep residents inspired at all times.

The elegantly designed homes feature upscale design elements including Nest Thermostats, USB and electronic Smart outlets and in-home washer/dryers, along with sophisticated finishes including white shaker style cabinets, grey quartz countertops, artisan tile backsplashes, plank wood flooring, and large soaking tubs or walk-in showers. Residents will also enjoy exclusive outdoor amenities, including an all-season open-air kitchen featuring a wine fridge, TV and pool table; an elegant pool courtyard with al fresco dining space, grills and a fire pit; a tranquil saltwater pool with bubblers, a tanning shelf and cabanas; and chic outdoor lounge areas that include a fountain courtyard featuring a fireplace, TV, pizza kitchen and ping-pong table.

Northland owns and operates a diversified multifamily portfolio that includes more than 25,000 units across the U.S. This acquisition adds Atlanta to Northland’s portfolio of long-term secondary and tertiary markets within New England, Austin, and Southwestern and Southeastern United States.

For more information and updates, follow Novel Perimeter on Facebook, and visit its website at https://www.novelperimeteratl.com/

The post Northland Makes Atlanta Market Debut with the Acquisition of Luxury Property Novel Perimeter appeared first on Northland.