Milwaukee-based multifamily real estate development firm Mandel Group today announced plans to sell 13 of its properties, representing about 40% of its real estate assets, to Salt Lake City-based real estate investment trust Cottonwood Communities, Inc. in a transaction valued at more than $600 million.
The Mandel Group-owned and operated properties will be combined with Cottonwood’s portfolio in exchange for units in Cottonwood’s operating partnership and cash, according to a news release and filings with the U.S. Securities and Exchange Commission. The properties include more than 2,200 units and have an average occupancy rate of 96.4%, according to the SEC filings.
The deal also combines the companies’ management platforms, which will oversee all Mandel Group assets, including properties not included in the transaction and projects currently under development.
“By combining a significant portion of our portfolio and our management operations with Cottonwood, we’re creating a platform with greater scale, enhanced operational capabilities and geographic diversity in high-growth metropolitan markets,” Barry Mandel, chairman and CEO of Mandel Group, said in a news release.
“This partnership with Mandel Group accomplishes our objective of growth and expansion in the best possible way,” Daniel Shaeffer, CEO of Cottonwood, said in the news release.
Following the transactions, Mandel Group will continue operating as an independent, privately held real estate development and asset management company. It will retain ownership and asset management of about $900 million in assets and continue pursuing existing and new development opportunities.
With this deal, Cottonwood will now own $3.3 billion in assets, including 13,400 apartments across 16 states and 21 markets.
In addition, Cottonwood recently purchased the Park Lafayette apartment towers at 2036 N. Prospect Ave. on Milwaukee’s East Side from Mandel Group for $94.1 million.
According to the SEC filings, asset-level member consents and lender approvals for the $600 million Mandel-Cottonwood deal are expected to be handled between October and December. Transaction closings also are expected to occur during the fourth quarter.
The press release and SEC filings did not identify the 13 apartment communities included in the deal. Mandel Group owns multifamily properties throughout the Milwaukee area, and a few properties in the Twin Cities and Des Moines areas.
Barry Mandel could not be reached for comment.
