Dive Brief:

• Mandel Group is contributing 13 apartment properties valued at over $600 million to Salt Lake City-based REIT Cottonwood Communities, according to a press release. In return, the Milwaukee-based developer and owner will receive units in Cottonwood’s operating partnership and cash.
• As part of the transaction, the two firms are combining their apartment management operations. The combined platform will manage all of Mandel’s assets, including properties under development and those not part of the transaction, per the release. Neither company responded to Multifamily Dive’s request for comment.
• In the current wave of mergers and acquisitions, Mandel and Cottonwood aren’t alone in linking up. Beyond high-profile REIT alliances, Midwestern private firms, including Milhas, have announced deals over the past couple of months.

Dive Insight:

Mandel CEO Barry Mandel will join Cottonwood’s advisory board as part of the deal. All of Mandel’s on-site associates, and nearly all of its corporate management team, will be retained by the newly merged entity, per the release.

Mandel will continue to operate as an independent, privately held real estate development and asset management company, with approximately $900 million of assets. The firm will also continue to actively pursue existing and new apartment development opportunities. 

“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,” Mandel said in the release.

After the transactions are complete, Cottonwood will own $3.3 billion in assets, including 13,400 apartments across 21 markets in 16 states. Cottonwood will also manage an additional 2,346 units, per the release.

“This transaction not only adds high-quality properties to the combined portfolio but also brings many talented and well-trained people to our team,” said Daniel Shaeffer, CEO of Cottonwood, in the release.

The transactions involving 12 properties are expected to close in the coming months, subject to lender and property-owning entity approvals and other closing conditions. In July, Cottonwood acquired the membership interest in one property, per the release.

Since its founding in 1991, Mandel has completed over $2.4 billion of residential and commercial real estate development and acquisition activity in the Milwaukee and other Midwestern markets. 

Before the transaction, Cottonwood, a non-traded REIT focused on apartments, had $2.7 billion in total assets, with 12,600 units across 18 markets. The firm’s sponsor, Cottonwood Communities Advisors LLC, has operated as a fully integrated multifamily platform since 2004. 

The past few months have brought high-profile REIT mergers, including AvalonBay Communities and Equity Residential and Centerspace and Independence Realty Trust. Other have also joined the fray.

In July, Milhaus and SRG Residential, a subsidiary of Sares Regis Group, merged, creating a multifamily platform with a $2.5 billion development pipeline, more than 50,000 homes managed and investing and lending capabilities across more than 20 markets nationwide.

Indianapolis-based Milhaus will also acquire Broadshore Capital Partners to expand its investment and lending capabilities, per the release, with the transaction expected to close later this summer.

In a strategic alliance announced on Aug. 18, UrbanStreet Group and Wingspan Development Group, the national development arm of Nicholas Family of Cos., agreed to combine their multifamily development efforts.

Under the terms of the agreement, Wingspan will transition its future pipeline of multifamily and mixed-use developments to UrbanStreet and focus on expanding into non-apartment sectors, including sports and entertainment venues, retail, industrial and land development.

Schaumburg, Illinois-based UrbanStreet will lead the partnership’s multifamily development efforts. Meanwhile, Mount Prospect, Illinois-based NFOC’s general contracting arm, Nicholas & Associates, will continue to provide construction services for multifamily projects that fall under the alliance in Illinois, Florida and Wisconsin, in addition to other markets when feasible.

Nick Papanicholas Jr., CEO and managing director of Nicholas Family of Cos., said Wingspan is contributing a pipeline of 7,500 to 10,000 units in various stages of development to the alliance. “We’re really looking to ratchet up our capital arm,” he previously told Multifamily Dive. “We’ve probably got about $225 million of assets under management. I mean we’re probably looking to take that up to $500 million.”

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