California dealing: AIMCO agrees to purchase Casden Properties

In a move to increase its Southern California presence, Denver-based Apartment Investment and Management Co. (AIMCO) has agreed to buy Los Angeles-based Casden Properties, a private REIT that owns 17,383 apartments, for $1.5 billion. The publicly traded AIMCO expects to close the sale in first-quarter 2002. The deal, which has been approved by Casden shareholders, does not require the approval of AIMCO shareholders.

As part of the transaction, AIMCO will issue $213 million in stock and securities to Casden's ownership group, which consists of Alan Casden, the company's founder, chairman and CEO, and an affiliate of New York-based Blackacre Capital Management.

With the purchase of Casden, AIMCO will acquire 6,356 market-rate apartments in Southern California, 1,381 of which still are under development, and 11,027 affordable-housing apartments in 25 states. AIMCO also will acquire National Partnership Investments Corp., a subsidiary of Casden that has an ownership interest in approximately 41,000 apartments. In all, the deal will increase the number of apartments that AIMCO owns or manages from approximately 304,000 units to 363,000 units.

In another component of the transaction, Alan Casden has formed Casden Development LLC, which will be staffed by current Casden Properties employees. AIMCO will have an option to buy apartment projects developed by the company.

Robert Stevenson, a REIT analyst for New York-based Morgan Stanley Dean Witter & Co. who covers AIMCO, said the amount of debt in the transaction bears watching. “Time will tell if they are able to execute on the financing,” he said. “It's mostly a debt deal.” AIMCO put approximately $217 million in cash into the purchase.

At the end of trading on Jan. 4, AIMCO's stock price closed at $45.98, down from its 52-week high of $49.63.

Despite a softening market, two new Atlanta projects are on the way

Industry observers may be growing more skittish about the Atlanta multifamily market, but that hasn't stopped plans for at least two new big apartment projects, one in the heart of the city, the other in one of its fastest-growing suburbs.

Houston-based Hanover Co. will break ground by the spring on a 39-story, 300-unit luxury apartment building in Buckhead, an Atlanta neighborhood that is a bastion of upscale office and retail properties. Completion of the project is scheduled for early 2004. The average unit will be 1,280 sq. ft., and rents will start around $1,500 a month.

Meanwhile, Chicago-based AMLI Residential has begun construction of a $23 million, 310-unit luxury apartment complex in Kennesaw, a northern suburb of Atlanta. A joint venture of AMLI and Milwaukee-based Northwestern Mutual will own the yet-to-be named complex, which will be located near the existing AMLI at Barrett Lakes complex. Occupancy of the new community is slated to begin in fourth-quarter 2002, with final construction and stabilization scheduled for fourth-quarter 2003.

The complex, which will contain 15 buildings, will feature 160 one-bedroom units, 130 two-bedroom units and 20 townhome units. The average unit size will be 1,035 sq. ft. Overall, the community will contain 321,000 rentable sq. ft. The complex also will feature a swimming pool, fitness center and a business center.

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