3650 REIT funds preferred equity portion of $500m Sun Belt apartment deal 

The national commercial real estate lender was part of a capital stack that includes Freddie Mac. 

3650 REIT has made a preferred equity investment in a $500 million Sun Belt apartment portfolio acquisition, providing financing for sponsors Dallas- and Florida-based managers RREAF Holdings and DLP Capital.

The transaction is one of the largest of its kind in 2022 and marks the third time 3650 REIT has provided financing to DLP and RREAF this year. 

In addition to equity capital provided by the three portfolio partners, Freddie Mac provided the debt financing through New York-based commercial real estate bank Berkadia.

3650 REIT is a firm believer in the strength of the multifamily market in the Sun Belt states.  

“Migration patterns continue to drive demand in these markets in the face of the ongoing housing shortage and economic headwinds nationwide,” said Jonathan Roth, the firm’s co-founder and managing partner. 

Don Wenner, DLP Capital founder and CEO, added that the affordable housing crisis was pervading every state in the nation. “[This makes] this multifamily transaction all the more significant,” he said, adding that through this partnership, the mission was to impact hundreds of families who want to live where they work while also delivering targeted returns to investors.  

Portfolio breakdown 

Southeast Multifamily Portfolio III includes 10 multifamily properties spanning Arkansas, Georgia, Indiana, Mississippi, North Carolina, Oklahoma and South Carolina.  

The apartment complexes, which in total comprise nearly three thousand units, are primarily in suburban-metro areas, with no new multifamily supply within a five-mile radius of most of the properties. The properties currently have a 93 percent collective occupancy.

“The closing of the Southeast Multifamily Portfolio III marks a milestone for our firm for affordable, quality housing options to renters in the Southeast as RREAF continues our business plan of providing superior living options at an affordable price,” said Kip Sowden, chief executive officer of RREAF Holdings. 

The acquisition was purchased from one seller and spearheaded by RREAF – which, along with its debt and equity partners, has built a diversified portfolio in excess of $5 billion in assets under management, across 15 states.