Bethesda, Maryland–based apartment owner RailField Partners closed on the purchase of Lory of Hillsborough in November, but the work to acquire the property near Durham, North Carolina, started much earlier in the year.

“We were going down the road with them in the spring and early summer,” said Jon Siegel, co-founder and chief investment officer at RailField. “That is when everything changed with interest rates.”

As some other bidders dropped out, Siegel continued working on the deal and discovered that RailField could take over the property’s existing loan. “We were able to assume the loan and take away all of the interest rate risk,” he said.

The 166-unit asset, which RailField renamed Pinewood Station Apartments, was the company’s first purchase in its new RG Value Add Fund. The vehicle is a joint venture with Chicago-based global alternative asset manager GCM Grosvenor, which invests on behalf of pension funds.

The Class B, garden-style property, built in 1974, features 23 two-story apartment buildings on a 21.8-acre site with a lake. It has a clubhouse, dog park, swimming pool, playground, fitness center, detached garages, BBQ and grilling area and community garden. 

Even with that amenity package, some upgrades are needed, Siegel said.

“There is deferred maintenance to correct, and we’re going to upgrade the amenities and units,” he told Multifamily Dive. “We think it really is a traditional value-add play — a great location and an older property with good bones. It's perfect workforce housing, and it's never going to compete with new construction.”

Pinewood Station sits near shopping, transportation and major employers. RailField has made it a priority to increase its presence in that area.

“The market checks all the boxes in terms of being a great market for multifamily, and there's a ton of demand,” Siegel said. “It's growing.”

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