Q2 2012 Atlanta, Georgia Apartment Property Sales Analysis

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Q2 2012 Atlanta, Georgia Apartment Property Sales Analysis

Metro Volume and Pricing

Investment activity has been increasing.* The $642.6 million that changed hands in 28 deals during the first half of 2012 amounted to 89.7% of the total recorded for all of 2011. Respective average selling prices were $82,000 and $65,000 per unit. The total for second quarter alone for 10 trades was $270.8 million at a mean selling price of $72,000 per unit.

In the quarter’s largest sale, the largest in a year, TA Associates Realty paid Equity Residential $57 million ($93,443 per unit) for the 610-unit Paces Station property at 3000 Paces Walk NW, Atlanta, in the Smyrna submarket. The all-cash deal closed May 30 at a 4.5% cap rate.

Since the quarter ended, Memphis-based MAA announced its acquisition of the 349-unit Allure at Brookwood “high-end urban multifamily apartment community” in Buckhead, PRNewswire reported in July. The two six-story buildings were completed in 2008. The price and seller were not disclosed.

Top Submarkets

The Marietta and North Gwinnett submarkets led all others in volume of property sold over the latest four quarters at 2,747 and 2,058 units, respectively. Transaction dollar volumes, however, were $173 million and $110 million. Roswell/Alpharetta followed with 1,806 units changing owners for $157 million. A total of 1,225 apartments were sold in the Smyrna submarket for $74 million. Sandy Springs-Dunwoody led the metro area in reported average selling price at $153,279 per unit for 610 units sold, all in the above-cited deal. Midtown followed with an average of $135,722 per unit for 962 units transacted.

Cap Rate Comparisons and Forecasts

Measured by the quarter, the average cap rate has been relatively steady for the past year. The rate for the latest quarter was 7.4%, up from 7.2% the quarter before, same as second quarter 2011. The 12-month rolling cap rate has been declining gradually. At 7.6% per the latest quarter it was down 20 basis points from the quarter preceding and was down 50 year-over-year. The 12-month rolling caps for the South Atlantic region and the U.S. as a whole, as of second quarter, were 6.8% and 6.5%, down and up from 6.9% and 6.4% the quarter before.