Starwood Partnership Divests 9,500-Unit MF Portfolio

Gaia Real Estate and Starwood Capital Group announced today that they have fully exited their PJ Portfolio investment. The portfolio consisted of over 9,500 multifamily units located in major metropolitan areas throughout the high-growth Sunbelt region. More than 45% of the units are located in Dallas with additional concentrations in Phoenix, AZ (19%), Atlanta, GA (8%), Houston, TX (8%), Fort Lauderdale, FL (7%), Corpus Christi, TX (6%), Nashville, TN (5%), and Orlando, FL (3%).

The acquisition of the portfolio was executed in May 2012 via Chapter 11 bankruptcy. At the time of purchase, the assets in the portfolio were undercapitalized with almost 8% of the portfolio’s units in an unleaseable condition. The partners executed capital improvement plan that injected tens of millions of dollars into the cash-starved assets. These capital expenditures brought the portfolio from over 20% vacancy at the time of purchase, to 5% upon stabilization.

The exit culminates a nearly 10-year partnership between Manhattan-based Gaia Real Estate and Miami-based Starwood Capital. At the time of exit, the project delivered a more than a 15x multiple.