Steadfast REIT Launches New Apartment REIT

By Gail Kalinoski, Contributing Editor

Ella Shaw Neyland, of Steadfast Income REIT

Fresh off the success of its first multi-family REIT, Steadfast REIT Investments L.L.C. is launching its second, Steadfast Apartment REIT, Inc., and beginning an initial public offering of $1.1 billion in common stock for the new REIT.

Steadfast Apartment REIT, Inc., is offering up to $1 billion in shares of its common stock for sale at $15 per share and up to an additional $100 million in shares of its common stock under its distribution reinvestment plan at $14.25 per share, according to a news release.

The Irvine, Calif.,-based REIT intends to use the proceeds from the continuous IPO to acquire and operate “a diverse portfolio of well-positioned, institutional-quality apartment communities in targeted markets throughout the United States that have demonstrated high occupancy and income levels across market cycles,” according to the REIT’s release.

An affiliate of the Steadfast Cos., Steadfast REIT Investments is the sponsor of Steadfast Apartment REIT and the first multi-family REIT – Steadfast Income REIT, Inc. Steadfast Capital Markets Group, the securities and financial services division of Steadfast Companies, is the deal manager and will distribute the product through retail broker-dealers and investment advisors.

Steadfast Income REIT closed to new investors on Dec. 20, 2013. As of Dec. 31, the REIT’s portfolio included 63 properties acquired for more than $1.5 billion, a Steadfast spokesperson told Commercial Property Executive. The REIT had nearly 16,000 units in 11 Midwestern and Southern states, the spokesperson added.

The REIT had been active in Texas, Alabama, Indiana, Iowa, Kansas, Kentucky, Missouri, Oklahoma, Ohio and Tennessee.

In November, Steadfast Income REIT acquired a six-property portfolio in Houston that consisted of 1,692 units. The price was not disclosed for those assets but the REIT had paid $97 million for apartment communities in Houston, Dallas and Nashville in October.

Ella Shaw Neyland, president of Steadfast Income REIT, told CPE in a recent interview the firm preferred to focus on the central corridor of the United States rather than go after assets in higher-priced coastal communities or urban infill locations. Neyland said the REIT seeks multi-family communities in locations that have above-average job growth, limited new construction, good quality of life, and a strong local and diversified economy.

The new Steadfast Apartment REIT intends to follow a similar strategy, according to a prospectus filed with the U.S. Securities and Exchange Commission. The SEC document also noted that Steadfast Apartment REIT plans to execute a “value-enhancement” strategy with about 30 to 40 percent of its portfolio. Those properties would be under-managed assets in high-demand neighborhoods that Steadfast would invest capital and reposition for better rents and resale values, the SEC filing stated.

“Although our primary focus will be the acquisition of multi-family properties, we may also selectively acquire debt collaterized by multi-family properties and securities of other companies owning multi-family properties, which we collectively refer to as real estate-related assets,” the REIT added in the SEC document.