North Jersey multifamily portfolio sells for $22.5M (updated)

A three-property multifamily portfolio in North Jersey was recently sold for $22.45 million, The Kislak Co. Inc. announced Sept. 29.

The Woodbridge-based commercial real estate brokerage marketed the properties exclusively on behalf of the sellers: Red Knight Properties Newton 2A LLC, Red Knight Properties Newton 2 LLC, and Red Knight Properties Newton MS-HS LLC. Senior Vice Presidents Joseph Keenan and Justin Lupo handled the assignment, also procuring the buyer — an undisclosed longtime client of the firm that completed a 1031 Exchange with the purchase.

Citing data from CoStar, Kislak said the sale price is the highest ever for multifamily properties in Sussex County.

Fully occupied at the time of sale, the portfolio includes:

• Swartswood Gardens – 4-20 Swartswood Road – 32 units
• Stonewood Apartments – 31 Paterson Ave. – 32 units
• Mill Street Manor – 4 Mill St. and 10-16 Hillside Terrace – 51 units

Keenan and Lupo arranged the sale of Swartswood Gardens and Stonewood Apartments to its most-recent sellers in 2020 for $7.3 million; earlier, Keenan arranged the sale of the same properties in 2016.

According to the firm, the property offers upside appeal with many of its rents below market. According to Rent.com, that median figure ranged from between $1,375 and $1,950 in 2022.

“What made this transaction so appealing to the purchaser was the nearly $16 million in assumable financing,” Keenan said in a statement. “The seller had put the debt on the property about 1.5 years ago at a rate that is much lower than what the purchaser could have obtained today. As a result, we were able to obtain record setting pricing in a rising interest rate market.”

“In an extremely volatile interest rate environment, the assumable in-place debt provided tremendous value to both the seller and purchaser,” added Lupo. “It allowed the seller to achieve ultra-competitive pricing while avoiding prepayment penalties on the loan. The purchaser was also able to hit an attractive yield level to put their 1031 exchange money to work.”

The garden apartment complexes are comprised of brick buildings amid professionally landscaped settings. According to Kislak, the properties feature recent improvements and abundant on-site parking 1 mile from the Sussex County offices in downtown Newton. 

Editor’s note: A previous version of this story misidentified the region as South instead of North Jersey; it was updated at 1:13 p.m. ET on Sept. 4, 2022.