2023 might have been a slow year for apartment sales, but that didn’t deter some companies.
Take Centerspace. Last year, the REIT sold 13 communities in Minneapolis, St. Cloud, Minnesota; Omaha and Lincoln, Nebraska; and its hometown of Minot, North Dakota.
In early March, Centerspace closed the sales of two more properties — the 69-unit Southdale Parc Apartments in Richfield, Minnesota, and the 136-unit Wingate Apartments in New Hope, Minnesota, according to a press release from commercial real estate services firm JLL, which represented the REIT and procured the buyers.
The 1962-built Southdale Parc Apartments, purchased by Southdale Parc LLC in St. Louis Park for $12.8 million, features one-bedroom units with fully equipped kitchens and oversized closets. It has on-site laundry facilities, an upgraded package system, green space and on-site parking.
The Wingate Apartments, built in 1967 and purchased by Wingate Apartments LLC in Brooklyn Park for $6.2 million, has one- and two-bedroom units with patios and balconies, oversized closets and fully equipped kitchens. Its amenities include a swimming pool with a furnished patio, basketball court, playground and community clubroom.
Minnesota news outlet Finance & Commerce reported the sales prices and identified the companies involved in the two transactions. The outlet also noted that Centerspace bought the Wingate for $14.2 million and Parc Southdale for $8.7 million. Both acquisitions occurred in 2021 as part of a larger portfolio transaction.
Moving forward
As Centerspace was looking to prune its portfolio, it made sense to sell the two Minnesota assets, according to CEO Anne Olson on the REIT’s fourth-quarter 2023 earnings call.
“Limited by size and age, these communities were not able to provide us with the NOI margin or growth we expect from our portfolio,” Olson said.
Centerspace plans to use the proceeds from the sale of the Southdale Parc Apartments in Richfield, Minnesota, and the Wingate Apartments to pay down its line of credit.
With the $226.8 million it gained from its 2023 sales, Centerspace acquired a community in Fort Collins, Colorado, and repaid debt.
Olson said Centerspace is looking to maintain balance sheet flexibility. Going forward, the CEO said the company will prioritize opportunities for external growth.
“With not a lot of transaction volume and still a pretty big disconnect in the market on pricing, that may be difficult,” Olson said. “But we want to make sure that we fund our value-add program sufficiently. We have $25 million to $27 million this year slated for that.”
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