Cottonwood to Acquire 13 Mandel Properties in $600M Deal

Cottonwood Communities, Inc. (CCI) has entered into a definitive agreement to acquire a portfolio of 13 multifamily properties owned and managed by Barry R. Mandel and his affiliates. The transaction, valued at over $600 million, is structured as a series of mergers and includes the acquisition of Mandel’s property management platform, Mandel Property Services, LLC (MPSI).

The properties are located primarily in the greater Milwaukee, Wisconsin metropolitan area. In addition to the real estate assets, Cottonwood will acquire MPSI, which manages the Mandel portfolio and certain third-party-owned properties. The aggregate purchase price for the properties and the management platform is approximately $519,925,000.

Under the terms of the merger agreements, the consideration for the properties will be paid in a combination of cash and common units of Cottonwood’s operating partnership, CROP. Members of the selling entities may elect to receive cash and/or CROP Units, subject to a cap on the aggregate cash consideration paid to non-affiliated members of 50% of the total purchase price. A portion of the consideration, totaling 1.5% of the Merger Consideration, will be placed in escrow to secure post-closing adjustments and indemnification obligations.

The transaction is subject to various closing conditions, including the approval of the members of the property-owning entities, the completion of the MPSI Acquisition, and the satisfaction of lender approvals. The mergers are also cross-conditioned, meaning the sellers' obligation to close is contingent upon the closing of other transactions representing at least 50% of the aggregate purchase price and 50% of the total number of properties.

Following the completion of the transactions, Cottonwood will own approximately $3.3 billion in assets, comprising 13,400 apartments across 16 states and 21 markets. The combined entity will also provide property management for an additional 2,346 multifamily units. Barry Mandel will join Cottonwood’s advisory board, and all of Mandel’s site associates and nearly all corporate management group will be retained by the newly merged entity.