RICHMOND, Va., August 18, 2022 – 37th Parallel Properties (“37th Parallel”) just announced their newest acquisition, Creekside South, a 252-unit, 2015-built multifamily community located in the thriving Wylie submarket. The asset was acquired in an off-market transaction by 37th Parallel on behalf of their investors and joint venture partners.37th Parallel now has more than 1,000 units in the Dallas-Fort Worth metro, representing over $235 million in asset value. This acquisition builds upon the firm’s recent activity in the Sunbelt, completing over $320 million in transactions over the last twelve months with an additional $85 million pending.
“North Dallas has experienced explosive growth in recent years, benefiting from 18 of the top 25 corporate relocations and expansions in 2020 alone,” said Dan Chamberlain, Managing Partner. “Wylie’s population has grown 43% in the last eleven years, almost twice the rate of the Dallas-Fort Worth metro overall and six times the national average. With average household income over $115,000 and access to one of the best school districts in Dallas, we believe Creekside is particularly well positioned to capture the demonstrated suburban demand,” said Chamberlain.
The property benefits from the comfort and convenience of a residential suburb combined with the connectivity and easy access to the multitude of Dallas metro amenities and employment centers. The property features a mix of one-, two-, and three-bedroom units with large floorplans averaging 936 square feet. Apartment and community amenities include nine-foot ceilings, private patios and balconies, resort-style swimming pool, outdoor lounge and firepit, as well as covered parking and attached garages.
Doug Fraser, who leads the acquisition efforts for the 37th Parallel, said, “The off-market acquisition of Creekside South is a testament to our proven investment philosophy and process and allows us to unlock significant value for our investors. We expect the demand for high-quality rental housing to continue as homeownership costs rise. The average price for a single-family home in the area has grown to $625,000, a 49% increase since January 2021.”
This acquisition marks the 8th investment from 37th Parallel’s inaugural fund, 37P – Fund I, which closed to new investment in early 2022. The Fund, which is over 85% invested, seeks to acquire value-add and core-plus multifamily real estate in dynamic growth markets in the Southeast and Texas. “We believe Creekside South makes an excellent addition to our growing Fund portfolio,” says Chamberlain. “The Fund has experienced exceptional cash flow growth, with rental rates across all of its assets increasing an average of 18% in the last twelve months, nearly double the rate of inflation,” he added. The Fund has investments in Dallas, Austin, San Antonio, and Atlanta.
The firm expects to launch its income and equity growth fund, 37P – Fund II, in September.
Chad Doty, Managing Partner, said, “Multifamily is benefitting from a significant supply-demand imbalance that continues to drive robust rental demand and high occupancy. The housing shortfall in the United States has grown to over 4 million homes, as the cost to build apartments has risen 31% in the last two years. Meanwhile, in the past eighteen months, the average home price has increased 35%, and mortgage rates have doubled, resulting in the widest cost differential between owning and renting in the past two decades. Given the demand and performance of Fund I, and the strong, secular tailwinds for multifamily, we are looking forward to the launch of Fund II in September,” he said.
37th Parallel has been actively growing its multifamily portfolio throughout the Southeast and Texas and expects to surpass $1 billion in total transaction volume by the end of the year. “We are very excited about the opportunity set for multifamily going forward amidst broader economic uncertainty,” said Fraser. “First, real estate supply is coming down as material costs have increased, supply chain challenges have elongated construction timetables, and higher interest rates have reduced liquidity for financing new projects. Combined with inflation, these factors support pricing power for existing real estate assets. Second, multifamily housing benefits from shorter duration leases, allowing rental rates to regularly reset to the prevailing market rates to stay ahead of inflation, which we have experienced real-time in our portfolio. Third, the sharp increases in home prices and borrowing costs have fueled record demand for multifamily. Our moderate leverage, demographic-focused model allows us to be conservative, while simultaneously putting us in a position to capitalize on the compelling investment opportunities that present themselves in volatile times.”
Berkadia’s Cutt Ableson secured low leverage debt financing from a global life insurance company on behalf of 37th Parallel for the acquisition.
37th Parallel Properties is a privately held, multifamily investment firm focused on owning and operating institutional multifamily communities in the Sunbelt. Based in Richmond, VA and founded in 2008, 37th Parallel has acquired and managed over 6,100 units and completed transactions totaling more than $950 million across the Southeast and Texas, all while maintaining a 100% profitable track record for its family of high net worth, family office, and institutional investors.
To learn more about 37th Parallel, visit www.37parallel.com.