CapStack Partners acquires multifamily portfolio in Nashville

CapStack Partners, the alternatives-focused investment bank and investment adviser, has acquired a three-property, 475-unit multifamily portfolio in Nashville for an undisclosed price.

The portfolio includes The Vistas, a 205-unit property; Fawnwood Apartments, a 158-unit property; and Archwood Meadows, a 112-unit property. The garden-style communities are located in submarkets of Nashville. CapStack plans to implement a multi-million dollar renovation and repositioning program across the portfolio to unlock embedded value and cash flow opportunities.

This is the first transaction that CapStack has executed within the scope of the investment mandate it secured in August to acquire value-add and opportunistic multifamily assets across the Southeast, both directly, as well as with established local operators and developers.

CapStack partnered with MACC Venture Partners, a Southeast-focused multifamily operator, to complete this transaction.

Nashville’s multifamily development pipeline ranked among the nation’s most active as of second quarter 2017, according to Colliers. Annual supply volumes ranged between 6,600 units to 7,600 units in each of the previous three quarters. Nashville also posted net annual supply of 7,545 units in second quarter 2017, which increased inventory by 5.8 percent since first quarter 2017.

In addition, Nashville’s multifamily market is absorbing 3,800 units to 5,700 units annually, according to the report. The market absorbed 5,113 units in the year ending second quarter 2017.

Despite elevated supply and development levels, rent growth has been solid, with annual increases of approximately 5 percent to 7 percent in 10 of the past 11 quarters, according to Colliers. Over the next 12 months, the firm predicts demand will likely continue to support rent growth in the 3.5 percent to 4.5 percent range, as the market digests record levels of oncoming supply.