Through a $2 billion joint venture, Northland Investment Corp. is acquiring a controlling stake in Tarragon Corp.”™s portfolio of 7,400 apartments, overnight becoming the largest residential landlord in Connecticut.
The deal follows Northland”™s $156 million purchase in January of six Tarragon properties in Florida and South Carolina. Northland will have a 78 percent stake in the joint ventures, with New York City-based Tarragon owning the remaining 22 percent of the shares. Tarragon is selling four properties to the joint venture for $166 million, including a complex in Manchester.
Northland Properties Management L.L.C. will be based in Newton, Mass., where Northland has its headquarters, and will open a satellite office with up to 100 employees in Connecticut to handle property maintenance.
The two companies”™ combined holdings would number 5,200 units in Connecticut and 16,000 more in six other states ”“ ushering Northland into the ranks of the 50 largest owners of multifamily dwellings nationwide.
Northland”™s Kate Moriarty is president of the Connecticut Apartment Association, whose members include Tarragon and AvalonBay Communities, the latter company one of Fairfield County”™s largest residential landlords.
Through its Ansonia L.L.C. subsidiary, Tarragon acquired more than 2,600 apartments in Connecticut in the past decade, but it does not own any apartment buildings in Fairfield County, despite the region”™s relative affluence. According to Cushman & Wakefield of Connecticut Inc., monthly rental rates increased 3 percent last year to $1,690 on average, and building owners reported they expect solid growth this year in part due to an insufficient number of new units in the pipeline, and a combination of high housing prices and difficulties obtaining mortgages that are forcing many to rent.
Four buildings were completed last year, totaling 550 units, and another 680 apartments are under construction, as well as 890 more condominium units and 780 town houses.
Residential apartment vacancies were 3.2 percent last year, down slightly from 2006. Rental rates have increased each year this decade except in 2002, when a sour economy spurred a 3 percent drop.
Tarragon announced last week a net loss of $388 million in 2007 on revenue of $449 million, with much of the losses due to write-downs on development projects and condominium conversions that were canceled or otherwise terminated. As of late March, the company was battling a foreclosure proceeding on a loan secured by a property it owns in Norwalk.
