Oaktree Real Estate Income Trust Breaks Escrow and Purchases Colorado Multifamily Property
December 12, 2019
Oaktree Real Estate Income Trust Inc., a publicly registered non-traded REIT sponsored by Oaktree Capital Management L.P., as of December 6, 2019, had satisfied the minimum offering requirement and the board of directors authorized the release of proceeds from escrow. The escrow agent released gross proceeds of approximately $150 million (including approximately $87 million that was funded by Oaktree Fund GPI, L.P., an affiliate of Oaktree Capital Management) to the Company in connection with the sale of shares of common stock.
On December 10, 2019, Oaktree REIT formed a joint venture with Holland Partner Group to purchase Sofi Westminster, a multifamily property located in Westminster, Colorado for $81.2 million, excluding closing costs. As of September 30, 2019, the property was 94.2% leased with an average monthly base rent per occupied unit of $1,399, for an annualized base rent of $5.25 million.
The joint venture acquired the property and paid related closing costs through a combination of $53.04 million of property-level debt from Freddie Mac, $26.22 million funded to the joint venture by the company and $2.91 million funded by Holland. The Freddie debt bears a fixed interest rate of 3.38% payable as interest-only through the full 84-month term.
Built in 1985, Sofi Westminster is a 332-unit multifamily property with a mix of one- and two-bedroom homes with floorplans averaging 754 square feet. The company plans to upgrade unit interiors in addition to renovating the exterior and common amenities.
The property is located in the Westminster submarket within Denver’s Northwest Corridor which is home to 26 business parks comprising 12 million square feet of office space and roughly 300,000 jobs. Furthermore, the property benefits from strong neighborhood demographics with high-quality schools and median incomes over $95,000 within a one-mile radius. The area has one of the highest concentrations of technology employment in the nation with several major technology employers within a ten-minute drive of the property.
Rents in Westminster, where the property is located, have grown 28% since 2014 compared to 13% in downtown Denver over the same period due to the submarket’s strong demand fundamentals and lack of new supply. Over the past 12 months, the submarket’s occupancy increased to 97% and rents have grown 2%. Oaktree Fund Advisors, LLC, the Company’s investment adviser, believes Westminster is likely to experience continued rent growth due to limited new supply as evidenced by only a few projects planned or under construction within a three-mile radius of the property.
Oaktree Real Estate Income Trust plans to invest primarily in “high quality” commercial real estate assets located across the top 50 markets in the United States. As of September 30, 2019, the company’s investments included two properties totaling $145.9 million, and $50 million in real estate-related loans secured by real estate assets
Oaktree, the REIT’s sponsor, is an investment manager specializing in alternative investments and has $122 billion in assets under management as of September 30, 2019.
Source: SEC
