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New York firm pays $40.5 million for two Cary apartment buildings

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Equity Residential, a Chicago real estate investment trust that has been shedding its Triangle assets over the last two years, has sold two Cary apartment buildings to a private New York investment firm for $40.5 million.

Somerset Partners, which invests in multi-tenant and office buildings, paid $21.5 million for the 444-unit Hidden Oaks Apartments and $19 million for the 344-unit Woodbridge Apartments.

Somerset is one of a number of outside investors that have entered or expanded their foothold in the Triangle during the downturn. In September, Somerset bought its first Triangle property, paying $15.6 million for the 345-unit Beech Lake Apartments in Durham.

“When you step out of the major markets ... when you look to the next rung of cities we like all the attributes Raleigh has,” said Phil Welch, a Somerset partner. “I’d say Raleigh and Nashville are the two markets were most focused on.”

Welch cited the Triangle’s diverse economy, jobs base and the presence of three high-quality universities as reasons the firm considers the region a good investment. He said the firm hopes to expand its Triangle presence in the future.

“We’ll still buy more, but at least we feel we’ve got a pretty good toehold there,” he said.

Equity, one of the nation’s largest REITs, once had one of the biggest apartment portfolios in the Triangle — 4,031 units in 15 communities across Durham, Orange and Wake counties.

Over the last two years the REIT has been selling assets as part of a broader strategy to cash out of smaller markets and invest in bigger cities.

Equity purchased Woodbridge for $7.5 million in 1996 and bought Hidden Oaks a year later for $8 million.

Both complexes had about four percent of their units vacant in September, according to the Triangle Apartment Association and Karnes Research.

Jeff Glenn, an investment broker at CB Richard Ellis in Raleigh, represented Equity in the Hidden Oaks and Woodbridge deals.

Apartment buildings have been about the only Triangle commercial real estate assets changing hands over the last year. That's largely because Freddie Mac and Fannie Mae, two government-sponsored entities, continue to finance apartment deals.

About $100 million in Triangle apartment assets have changed hands just since December.

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About the blogger

Business reporter David Bracken came to the N&O in 2004. He covers commercial and residential real estate. Contact David at 919-829-4548 or e-mail him.