Sagard Real Estate acquired Grande Oaks, a 270-unit garden-style apartment community located in Roswell, Georgia. Starwood Capital Group was the seller. Commercial Edge reports Starwood initially purchased the community in 2021 for $77.7 million. Sagard plans to execute a value-add renovation program, including upgrading 121 classic units, installing in-unit laundry, enhancing common areas, and refreshing amenities.

Built in 1996, Grande Oaks spans over 311,000 rentable square feet across 11 residential buildings on a 19-acre site. The community features a well-rounded amenity package, including a clubhouse, fitness center, swimming pool, outdoor fireplace, grill and picnic area, children’s playground, car wash, and pet-friendly facilities such as a dog park and pet wash station.

The investment was made in partnership with McCann Realty Partners and Pegasus Residential. This is the second property managed by Pegasus Residential on behalf of Sagard Real Estate.

Starwood Capital Group sold the Turtle Cove apartments just outside West Palm Beach to Brookfield Properties for $107.5 million. Starwood sold the 444 apartments at 825 Cotton Bay Drive East for $242,072 per unit. The apartment community last traded for $61.5 million in 2016.

The sale was part of a portfolio sale. The S. Florida Business Journal reports Starwood agreed to pay $1.55 billion to Brookfield for 23 apartment complexes across the U.S. with about 7,300 units. Turtle Cove was among the properties listed, along with Miramar Lakes in Miramar and Sabal Pointe in Coral Springs.

Totaling 404,222 square feet, Turtle Cove was built on the 36.7-acre site with a lake in 1986.

Units in Turtle Cove range from 665 to 1,160 square feet and rent from $1,765 to $2,350. Amenities include two pools, a fitness center and a sports court.

Starwood Real Estate Income Trust and Morningstar Properties have formed a joint venture to invest in the “resilient” self-storage sector, according to a Tuesday release. 

The new entity will recapitalize 25 self-storage assets already owned by Morningstar funds and invest in additional assets to be operated under the Morningstar brand. The joint venture will look to buy both one-off assets and portfolios.

Self-storage is an attractive asset class for investors.

The existing portfolio includes 1.8M SF of storage space located throughout the Sun Belt region, “which is experiencing significant population, employment and income growth,” according to the release. 

“The sector’s stable cash flows fit well with SREIT’s yield and long-term hold objectives,” Starwood Capital Managing Director Ethan Bing said in a statement. “Morningstar is a best-in-class branded operator and this partnership provides immediate scale in a fragmented sector in addition to creating a platform for substantial growth.”

Starwood Capital Group is a Miami Beach-based behemoth private investment firm with $105B of assets under management with several REITS under its umbrella. Not to be confused with Starwood Property Trust — which trades on the New York Stock Exchange — Starwood Real Estate Income Trust is a nontraded NAV REIT whose portfolio, as of November, included $18.2B of assets across 334 properties. 

Not to be confused with Morningstar Inc. — a financial services firm that trades on Nasdaq — Morningstar Properties is a 40-year-old Charlotte, North Carolina-based firm that serves as fund manager, developer, owner and operator, with a focus on specialty properties across a dozen states. With its Morningstar Storage and Morningstar Marinas brands, the company manages 88 storage properties and five marinas, according to its website.

Starwood Real Estate Income Trust in November bought a multifamily housing portfolio consisting of 15,460 units in 62 communities across 10 states from San Diego-based Strata Equity Group. The REIT’s portfolio also includes hotels, industrial, office and other residential properties, as well as loans. 

Investment giants Blackstone Group and Starwood Capital have each acquired equity stakes in Extended Stay America, which operates 632 long-term hospitality properties.

The deals come at a time when the U.S. hospitality industry as a whole has cratered, with occupancies at historic lows and many properties permanently closed.

For the week ending April 11, U.S. hotel occupancy was down nearly 70 percentage points from the same week in 2019, to 21%, and revenue per available room, or RevPAR, was down 83.6% to $15.61, according to STR data. As of April 16, about 848,000 hotel rooms were closed, or about 16% of the entire U.S. total of 5.4 million rooms. 

Yet less expensive hotels, which often include properties in the extended-stay segment, are doing somewhat better than the rest of the industry, the Wall Street Journal reports, noting that Extended Stay America has thus far closed none of its properties.

For the week ending April 11, economy hospitality properties experienced 33.6% occupancy, STR reported, with more expensive rooms in far less demand. Luxury and upscale hotels were less than 9% occupied as of April 11.

“For economy-type properties, there is this a strong base of demand that we continue to see, no matter what the economic conditions may be,” STR Senior Vice President Jan Freitag said in a company webinar last week.

“As some Americans lose their homes because they can’t make mortgage payments, you may see the occupancy in the economy and extended-stay properties actually increase as people move into temporary shelter for awhile,” Freitag said.

“There is a significant residential guest component in economy extended stay hotels,” Mark Skinner, a partner at hotel consultancy Highland Group, told Skift. “The second reason is that the construction industry is a very large demand generator for those hotels.”

Extended-stay rooms are 39% occupied, STR reports, as healthcare workers, construction workers, airline crews and others take up the slack from a vastly reduced number of business travelers.

Even in the extended-stay segment, less expensive properties are doing better, STR reports. The lower-priced extended-stay rooms are 51.5% occupied, while upper-priced rooms are 26.5% occupied.

Both investors acquired their piece of Extended Stay at a discount to recent share values.

Blackstone acquired a 4.9% stake in Charlotte, North Carolina-based Extended Stay at about $6.50/share in mid-March, the WSJ reports. Starwood acquired 8.5% of Extended Stay for about $9/share. At the beginning of 2020, the company traded just shy of $20/share.