Gaia Real Estate and Starwood Capital Group have sold a 9,500-unit apartment portfolio in the Sunbelt to PJ Portfolio investment. The duo purchased the portfolio in a Chapter 11 bankruptcy sale in 2012, and executed a value-add strategy on the dilapidated portfolio. Ultimately, the investment generated a 15x multiple return for investors after the 10-year hold.

The portfolio is located in growth markets throughout the Sunbelt region. Nearly half of the portfolio is in Dallas, while 19% is located in Phoenix; 8% in Atlanta; 8% in Houston; 7% in Ft. Lauderdale; 6% in Corpus Christi; 5% in Nashville and 3% in Orlando. At the time of purchase, the portfolio had 20% vacancy rate and 8% of the units were not in leasable condition. Gaia Real Estate and Starwood Capital Group infused tens of millions into the portfolio, stabilizing the portfolio and bringing vacancy to 5%.

The investors attribute the tremendous success of the investment to the early adoption of the Sunbelt investment strategy as well as a commitment to workforce housing investment. Workforce housing has been called America's most wanted rental housing assets by Cathy Danigelis, western region manager at KeyBank, who estimates that workforce-housing renters make up about 60% of the total renter pool, more than both market-rate and affordable housing.