Cottonwood Communities, Inc. has agreed to combine a portfolio of 13 Mandel Group multifamily properties with the nontraded REIT’s existing portfolio. Cottonwood valued the portfolio at approximately $614 million in its investor presentation, while Mandel described the properties as having a value of more than $600 million.
The transaction agreements cover 12 properties located primarily in the Milwaukee metropolitan area. Cottonwood acquired the thirteenth property, Park Lafayette Towers in Milwaukee, in July. The pending transactions are expected to close during the coming months, subject to property-owner approvals, lender consents, and other closing conditions.
Cottonwood’s SEC filing lists an aggregate purchase price of approximately $519.9 million for the pending properties and Mandel Property Services, Mandel’s property-management platform. That figure includes the assumption or repayment of debt at closing and excludes the previously acquired Park Lafayette property. Consideration will consist of cash and units in Cottonwood Residential O.P., LP, with cash elections generally subject to a 50% cap and potential proration.
Cottonwood and Mandel will also combine their property-management operations. Cottonwood’s presentation indicates that approximately $700 million of additional Mandel assets will be managed on a third-party basis. Mandel will continue operating independently as a real estate developer and asset manager, while Barry Mandel will join Cottonwood’s advisory board.
If the transactions are completed as contemplated, Cottonwood expects to own approximately $3.3 billion of assets, encompassing 13,400 apartments across 16 states and 21 markets. The combined management platform would also oversee another 2,346 multifamily units, materially expanding Cottonwood’s portfolio, operating scale, and third-party management business.
