Value-Add Apartment Property for Sale in New Castle, Delaware

Monday, May 7, 2018

Holliday Fenoglio Fowler, L.P. (HFF), on behalf of the owner, is marketing for sale Castlebrook Apartments, a 634-unit, value-add, multi-housing property located in New Castle, Delaware. Castlebrook is a unique offering that affords an investor the ability to acquire a well-maintained, value-add asset of significant scale in suburban Wilmington.

Castlebrook comprises 29 three-story residential buildings spread across 33.12 acres in an irreplaceable, low-density setting. The unit mix is a diverse blend of studio, one-, two- and three-bedroom apartment homes with open floorplans and a private patio or balcony. The multi-housing property offers a competitive amenity package highlighted by a renovated community clubhouse, an Olympic-sized swimming pool with a sun deck, a contemporary fitness center, tennis courts and a community social room. Additionally, residents benefit from the ability to walk to a variety of local amenities including Food Lion, Wawa, Walgreens, a dry cleaner and a liquor store.

Since acquisition, current ownership has infused meaningful capital into the property by building a ground-up resident clubhouse and replacing all roofs (2016 and 2017), gutters, downspouts, windows, sliders, air condensers, paving and more, which affords new ownership the opportunity to focus capital on direct revenue enhancing expenditures such as unit renovations and amenity enhancements. To date, approximately 20 percent of the units have received varying levels of renovation, providing a proven value-add program and leaving a substantial portion of the property available to be renovated. Fully renovated units are achieving a weighted average of $182 over unrenovated units.

Benefitting from Delaware’s advantageous tax climate, New Castle County is home to a diverse set of employment drivers and a variety of major corporations. Multiple national retailers are proximate to the multi-housing property for sale and offer tax-free shopping. The University of Delaware, which is in the midst of a robust expansion, is a 15-minute drive from the property and serves as an economic anchor for the region. Additionally, due to its central location along the eastern seaboard, New Castle County’s residents have direct access to Philadelphia, Baltimore, Wilmington, New York and Washington, D.C. via Interstates 95, 295 and 495 and the New Castle/Wilmington airport, which is only three miles from the property.

Value-Add Apartment Property for Sale Investment Highlights

  • Compelling Value-Add Opportunity:  As currently positioned, Castlebrook’s unrenovated in-place rents trail the market average for comparable properties by upwards of $250 per unit. New ownership could capitalize on the current loss-to-lease through an aggressive leasing campaign, closing the gap on the competitors. New ownership could renovate a substantial portion of the units. New ownership could renovate a substantial portion of the units. Approximately 20 percent of the units have received varying levels of upgrades, affording the opportunity to generate additional revenue by implementing a modern, streamlined renovation plan throughout the property. Fully renovated units are achieving a weighted average premium of $182 over unrenovated units.  Embedded upside is evident with the ability to install washer/dryers to 544 of the 634 units that do not currently have one. This implementation will achieve a strong return on cost on the $30-40 premium as a simple, direct revenue enhancing strategy.
  • Central Location in New Castle County:  Centrally located along the Interstate 95 corridor in New Castle, Delaware, Castlebrook Apartments, provides residents with convenient access to a variety of local lifestyle amenities along with direct access to many major metropolises; downtown Wilmington is eight miles away, and Center City Philadelphia is 35 miles away. Additionally, Washington, D.C. is 100 miles from New Castle. New Castle County is home to a plethora of employment drivers and numerous major corporations. More than 50 percent of publicly traded companies and 60 percent of Fortune 500 are incorporated in the state, including many of whom call New Castle County home, including JPMorgan Chase & Co., DuPont, Sallie Mae, Aberdeen, Bank of America, AstraZeneca, Barclay’s, Hewlett Packard, Nemours Hospital and the Christiana Hospital.
  • A Surplus of Nearby Amenities:  The 1.3 million-square-foot Christiana Mall and the Christiana Town Center, which are minutes from the property, are home to a variety of national retailers offering tax-free shopping, including Nordstrom, Restoration Hardware Outlet, Macy’s, Apple, JCPenney, Anthropologie, Barnes & Noble, Urban Outfitters, Buy Buy Baby, Target and more.
  • Proximate to the University of Delaware:  CastleBrook Apartments is a short drive to the University of Delaware (UD), home to approximately 23,000 students and more than 4,000 employees. In 2014, UD acquired the former Chrysler Plant and inaugurated the new Science, Technology and Advanced Research campus, known as the STAR Campus. The STAR Campus is a 272-acre incubator for future development that will establish UD as a center of innovation, focused on leading research in areas such as health science, cyber security and alternative energy. Through partnerships with private businesses and government agencies, UD will provide educational and professional opportunities for students while igniting job and economic growth within the state. The Newark Train station runs along the peripheral of the campus providing transportation to the research, residential, dining, hotel, grocery and university buildings contained within the campus. This acquisition and development by UD is evidence of the path of growth south of the campus in closer proximity to Interstate 95 and the surrounding residential area.

For more information on this commercial real estate listing or other multifamily properties for sale in the Mid-Atlantic, please contact Mark Thomson, Carl Fiebig or Francis Coyne in HFF’s Philadelphia office. The team includes Robert M. Stella with Financial & Consulting Services, Inc., a licensed Delaware real estate broker. To view HFF’s current real estate investment sales listings, please click here.

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