M Patrick Carroll’s CARROLL and PGIM Real Estate Partner on Multifamily Portfolio Sale
By Exec Edge Editorial Staff
As the 2021 calendar year winds down, the Southeastern United States’ commercial real estate market shows continued growth. In November 2021, Atlanta-based real estate investment firm CARROLL engaged in another notable multifamily housing transaction.
On November 17, 2021, CARROLL and partner PGIM Real Estate were slated to close on the sale of a $1.1 billion Southeastern U.S. apartment complex portfolio. M Patrick Carroll, CARROLL’s Founder and CEO, played a key role in the negotiations.
Terms of the CARROLL-PGIM Deal
Under the agreement’s terms, Miami Beach-based Starwood Capital agreed to purchase nine garden-style multifamily properties totaling 3,441 units. The properties are located in South Florida and North Carolina. CARROLL and PGIM acquired the properties in three 2018 transactions.
The remainder of the sale consists of an unnamed buyer’s purchase of three Charleston-area properties containing a total of 680 units. In August 2018, CARROLL bought these South Carolina properties from JRK Property Holdings. Each property was valued at $156,000/unit, or $106 million total.
The deal’s framework includes a property valuation of slightly less than $270,000 per unit. This valuation gives Starwood a total purchase price of over $900 million. Newmark served as the broker for the Florida properties deal. There is no indication that CARROLL and PGIM hired a broker for the Carolinas properties transaction.
Collectively, these deals illustrate investors’ market optimism and strong desire to engage in large-scale multifamily communities transactions. Strong market fundamentals and reduced interest rates are driving these movements.
CARROLL’s M Patrick Carroll Shares Strategic Insights
M Patrick Carroll, CARROLL’s Founder and Chief Executive Officer, noted that the recently dispositioned properties had been purchased as a key component of the firm’s value-added workforce housing strategy. This innovative goal involves the acquisition of properties in high-growth metro area markets.
CARROLL invested almost $22 million to renovate numerous units’ interiors. During the deal’s due diligence phase, investors were advised that buyers could further enhance their cash flows by executing additional upgrades to certain apartments along with common areas.
The Starwood Capital Properties’ Backgrounds
Starwood Capital ‘s new Southeastern multifamily properties each contribute to a growing metropolitan market. Together, these apartment homes meet the housing needs of a diverse tenant base.
South Florida Properties
Starwood Capital’s South Florida properties together comprise 1,150 units. Together, the properties are a key component of a four-property portfolio acquired in April 2018 for $210,000/unit, or $338.8 million total. A three-firm partnership comprised of Greystar Real Estate Partners, Goldman Sachs, and Ivanhoe Cambridge sold the portfolio.
North Carolina Properties
Starwood Capital’s North Carolina component consists of six Raleigh-Durham area properties containing 2,291 units. In November 2018, CARROLL and PGIM purchased the Raleigh-Durham properties from Lone Star Funds. These properties made up the majority of a 2,883-unit portfolio that the investment partners bought for $141,000/unit, or $407.5 million total.
Starwood’s Additional Apartments Acquisition
In 2021, Starwood Capital has engaged in numerous multifamily housing purchases and sales. To illustrate, the Starwood Real Estate Income Trust, the shop’s non-traded REIT, has recently made a major acquisition.
In November 2021, The Starwood REIT closed on the purchase of 15,460 units from San Diego’s Strata Equity. This Southeastern market transaction, valued at $3.65 billion, was comprised of 62 multifamily properties in 27 metropolitan markets throughout 10 states. Each property carried a $236,000/unit valuation.
For perspective, Starwood Capital has reported $145.6 million in net operating income. The Company’s initial annual yield is slightly less than 4%.
M Patrick Carroll Highlights New Suburban Migration
CARROLL’s M Patrick Carroll is an astute real estate investor who consistently tracks economic trends and market fundamentals. In certain cases, he has followed a specific market for years before identifying an attractive investment opportunity.
In 2021, Carroll says the post-pandemic United States economy is very much in flux. Specifically, housing market trends reflect this rearrangement of lifestyle indicators.
To explain, M Patrick Carroll draws attention to consumers’ post-Great Recession housing market preferences. Many people migrated to urban centers, attracted by the metro areas’ amenities and conveniences. Market-savvy investors seized opportunities in left-behind suburban properties.
The Housing Market Continues to Evolve
Today, consumers are heading in the opposite direction. Many residents continue to leave tightly packed cities, heading for suburban areas with accessible green spaces and more affordable living costs.
However, these discerning consumers still want many city-living perks and conveniences. Specifically, no-maintenance living, walkable amenities, and easy access to large outdoor spaces are high on the list. Remote workers seek homes with updated WiFi infrastructure and sufficient space for a dedicated home office.
Most multifamily properties can easily meet these needs. Investors with older apartment communities can level the playing field by devoting resources to interior and exterior renovations along with landscaping upgrades. Electronic infrastructure improvements will attract residents accustomed to technology-enhanced living spaces that support their lifestyle demands.
About M Patrick Carroll
M Patrick Carroll, CARROLL’s dynamic Founder and CEO, is the driving force behind the Company’s real estate investment industry achievements. An extremely successful investor, Carroll often teams up with strategic partners, institutional investors, brokers, and lenders. He also works with on-site management teams to enhance delivered results and maximize investors’ returns.
Under M Patrick Carroll’s leadership, CARROLL has executed numerous targeted acquisitions. In addition, he has directed the disposition of over 88 properties when predetermined investment return goals were realized. Collectively, CARROLL’s dispositions have garnered $4.2 billion of sales proceeds to date. This figure translates to an average gross internal rate of return (or IRR) of 26%.
An Impressive Real Estate Evolution
M Patrick Carroll’s exemplary commercial real estate achievements are the result of strong leadership and sustained hard work. While working in Atlanta in his early 20s, he developed the vision of his own successful real estate business. Aided by proven business leaders, he readied the launch of CARROLL, a real estate investment firm that reflected his bold ambition.
In 2004, CARROLL executed its first property transaction, a condo financed by a 100% mortgage. After successfully flipping this and other properties, Carroll branched out into home construction.
With the profits from the development and sale of a 150-unit community, 27-year-old M Patrick Carroll purchased three property management businesses. This venture marked his entry into the multifamily housing sector arena. One year later, CARROLL was managing 20,000 units spread throughout the United States.
Initially, M Patrick Carroll focused on the Florida and Georgia multifamily housing markets. However, market indicators showed that the larger Southeastern market offered good investment potential. This spurred Carroll to add South Carolina and North Carolina properties to CARROLL’s investment portfolio.
Atlanta-based CARROLL is a leader in the United States’ commercial real estate arena. Under M Patrick Carroll’s direction, the Company has acquired over $7.6 billion in assets while selling more than $4.2 billion. Since CARROLL’s 2004 launch, the firm has provided oversight for over $200 million in properties for its principals, private investors, and diverse institutional partners.
In 2021, CARROLL holds over $5 billion in managed assets. In addition, the Company owns over 30,000 commercial and residential assets along the United States’ East Coast. The firm cultivates an entrepreneurial culture, and it also has a deep internal stable of top-tier market analysis and execution professionals.
Taken together, these attributes enable CARROLL to excel in the highly competitive commercial real estate industry. With real estate expert M Patrick Carroll’s boundless determination and decisive leadership, the firm is well-positioned to continue its impressive market performance.