Valley Ranch Apartments located in Ann Arbor, Michigan Acquired by Lightstone Value Plus Real Estate Investment Trust V, Inc.
Ann Arbor, Michigan / February 14, 2019 / Lightstone Value Plus Real Estate Investment Trust V, Inc. (the “Company”), through LVP BH Valley Ranch LLC (“LVP BH Valley Ranch”), a subsidiary of Lightstone REIT V OP LP, the Company’s operating partnership, entered into an Assignment and Assumption of Purchase and Sale Agreement (the “Assignment”) with LVP BH Acquisitions LLC (the “Assignor”), an affiliate of the Company’s advisor, an affiliate of the Lightstone Group, LLC. Under the terms of the Assignment, LVP BH Valley Ranch was assigned the rights and assumed the obligations of the Assignor with respect to that certain Agreement of Purchase and Sale (the “Purchase Agreement”), dated December 10, 2018, as amended, made between the Assignor, as the purchaser, and Tilden Valley Ranch Apartments LLC (the “Seller”) as the seller, whereby the Assignor contracted to purchase a 384-unit multifamily property located in Ann Arbor, Michigan (the “Valley Ranch Apartments”).
On February 14, 2019, the Company, through LVP BH Valley Ranch, completed the acquisition of the Valley Ranch Apartments from the Seller, an unrelated third party, for approximately $70.3 million, excluding closing and other acquisition related costs.
In connection with the acquisition of the Valley Ranch Apartments, the Company simultaneously entered into a $43.4 million mortgage loan (the “Loan”) scheduled to mature on March 1, 2026. The Loan requires monthly interest payments through its maturity date and bears interest at 4.16% through its maturity. The Loan is collateralized by the Valley Ranch Apartments and is non-recourse to the Company.
In connection with the acquisition, the Company’s advisor, an affiliate of the Lightstone Group, LLC, received an aggregate of approximately $1.2 million in acquisition fees, acquisition expense reimbursements and debt financing fees.
LVP BH Valley Ranch also entered into a management agreement with an affiliate of the Company’s advisor, an affiliate of the Lightstone Group, LLC, for the management of theValley Ranch Apartments commencing on February 14, 2019.
The capitalization rate for the acquisition of the Valley Ranch Apartments was approximately 5.35%. The Company calculates the capitalization rate for a real property by dividing the net operating income (“NOI”) of the property by the purchase price of the property, excluding costs. For purposes of this calculation, NOI was based upon the twelve months ended November 30, 2018. Additionally, NOI is all gross revenues from the property less all operating expenses, including property taxes and management fees but excluding depreciation.