Lubert-Adler Buys Huntington Point Apartments for $78M, Amasses $2B M-F Portfolio

By Adrian Maties, Associate Editor

Philadelphia-based real estate investment company Lubert-Adler recently partnered with The Laramar Group to purchase the Huntington Point apartment complex in Alexandria, Va., for $78 million.

Located on the Potomac River, just south of Old Town Alexandria, the complex had been owned by the Virginia Department of Transportation since 2002. It sold the 530-unit apartment complex to the partnership for about $147,000 per unit. Hardly the first building the two companies acquired together, in April they bought the 376-unit Woodvale Apartments for $53.2 million.

In a release, Lubert-Adler said that, despite Huntington Point’s superior location, unit interiors and amenities have been untouched for years and rents are 30 to 40 percent below market rate. The company believes it can transform the property into a Class A apartment community.

The new owners plan to invest about $14 million in capital improvements over the next three years, with upgrades that will include new lobbies, corridors, rooftop entertainment areas, building systems, mechanical repairs, façade improvements and riverside pool amenities. Individual apartments will also be renovated, with new kitchens, baths, windows, flooring and other improvements.

Lubert-Adler launched its Fund VI in January 2010. To date, it has invested $2 billion invested on behalf of domestic institutional investors, having acquired, among other things,  almost 70 multifamily properties totaling more than 20,000 units. “In 2010, we made a strategic decision based on the belief that multifamily rental apartments provide one of the best opportunities to create risk-adjusted superior returns, because a substantial portion of the overall return is in the form of current yield,” Dean Adler, co-founder & CEO of Lubert-Adler Partners L.P., said in a statement for the press.

The acquisition of Huntington Point fits perfectly into the company’s strategy. “In order to execute that strategy, we sought out one-off middle-market acquisitions through local entrepreneurs, focusing on transactions that are too large for local operators but smaller than those that would interest the very large funds,” Adler added. “Our goal was to buy assets opportunistically, preferably from sellers who are not in the everyday business of improving real estate, and then work with our local partners to increase current yield by renovating and repositioning the assets. Now that we have achieved our initial goal, we plan to continue this value-add program into the future.”

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Photo credits: LHB Communications

Normandy Hotel Sells in Washington

By Adrian Maties, Associate Editor

Modus Hotels, a Washington, D.C.-based owner and operator of lifestyle hotels, partnered with Alex. Brown Realty (ABR), a real estate manager based in Baltimore, to purchase the Normandy Hotel in Dupont Circle. ABR Chesapeake Fund IV, a value-added real estate fund sponsored by ABR, invested in the venture. The hotel sold for $16 million, or $213,000 per key.

The Normandy Hotel, located at 2118 Wyoming Ave., N.W., recently renovated its 75 rooms to the tune of $6 million, according to Aaron Katz, president & CEO of Modus Hotels. They feature 100 percent natural down-and-feather beds, marble bathrooms, upscale bath products, Nespresso coffee makers, flat-screen TVs and complimentary high-speed Internet.

The hotel is close to such D.C. attractions as the Phillips Collection and the National Museum of Art, the National Mall, the Library of Congress, the Lincoln Memorial, the Washington Convention Center, the Smithsonian and some of the best bars, restaurants and lounges in town. Katz said the Normandy’s residential feel ”allows guests to feel at home in the midst of the busy city and is the perfect retreat for leisure and business travelers.”

“The Normandy reflects a sophisticated personality and style and is a perfect complement to our expanding collection of distinctive, lifestyle hotels,” Katz said in a statement for the press. “We continue to have a strong appetite for properties in destination marketplaces with high barriers to entry at below replacement costs where we feel we can add value through a combination of superior management and, when necessary, material property improvements.”

This is Modus’ third acquisition in 12 months. Its portfolio now includes 13 hotels, seven of them in the metro D.C. area. Its collection of upscale lifestyle properties includes such hotels as The River Inn, Avenue Suites Georgetown, The Quincy, The Windsor Suites and The Brookshire Hotel and Suites, Inner Harbor Baltimore.

Photo credits: www.facebook.com/NormandyHotel

Tanger, Peterson Cos. to Develop Upscale Outlet Center in Clarksburg

By Adrian Maties, Associate Editor

Greensboro, N.C.-based REIT Tanger Factory Outlet Centers Inc. and The Peterson Cos., one of the largest privately owned real estate development companies in the Washington, D.C., region, on April 16 announced they have joined forces to bring a new, upscale outlet center to the Washington, D.C., metro area.

The new outlet center will be branded as a Tanger Outlets. It will be located at the interchange of I-270 and Stringtown Road in Clarksburg, Md., 27 miles northwest of Washington, D.C., and 36 miles west of Baltimore. Currently, the outlet center is in the pre-development stage.

Tanger Outlet Centers and The Peterson Cos. will co-own the property. The two companies will provide site development and construction supervision services. Tanger will also manage, lease and market the retail space. For the time being, the developers have not released any information regarding the project’s cost or size.

“This partnership with Peterson Cos. is strategically designed to deliver a world-class outlet center to this exciting Mid-Atlantic market. We believe this new Tanger Outlet Center will be a must-visit value destination and an exceptional experience for our shoppers,” said Steven Tanger, Tanger’s president & CEO, in a statement to the press.

“We have a strong track record of creating dynamic lifestyle centers in Montgomery County, and we are excited about the opportunity to incorporate Tanger Outlets into our vision for a dynamic mixed-use project that Clarksburg will be proud of,” added Taylor Chess, senior vice president of retail for Peterson Cos.

Tanger Outlet Centers and The Peterson Cos. are also jointly developing Tanger Outlets National Harbor, on which they broke ground in November. The  $100 million center is one of the largest economic development projects in the county and will create an estimated 600 jobs during construction and almost 1,000 full- and part-time retail jobs upon completion. With 350,000 square feet of retail space, it is expected to open for the 2013 holiday season and will be home to more than 80 retailers. According to Marcus & Millichap, this year the Washington, D.C., metro area planned store openings will reach a three-year high.

Photo credits: The Peterson Cos.

Charts courtesy of Marcus & Millichap.

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The District, Woodvale Apartments Change Hands as D.C.’s Apartment Market Heats Up

By Adrian Maties, Associate Editor

Apartments in the Washington, D.C., metro area are selling fast and for a lot of money. Just this past month, investors paid close to $1 billion for properties totaling around 3,500 units.

The District apartments at 14th and S streets, N.W., and Silver Spring’s Woodvale Apartments are just the latest names on the list. According to the Washington Business Journal, The District apartments sold for $76 million, or roughly $608,000 per unit, while the Woodvale Apartments traded for $53.2 million, or roughly $141,489 per unit.

The JBG Cos. was the owner and developer of The District. The Chevy Chase-based company sold the complex less than a month after finishing construction to JP Morgan. JBG Cos. developed the property under a partnership with Grosvenor Americas. Construction started in 2011.

The District has 125 studio, one- and two-bedroom units. It is LEED Silver certified and features such amenities as garage parking, wi-fi, bike storage, a private on-site fitness center, a sundeck and more. Shalom Baranes Associates was the architect for the project. The Bozzuto Group is leasing the property.

Federal Capital Partners and Angelo, Gordon & Co. sold the Woodvale Apartments to the Laramar Group L.L.C. and Lubert-Adler Partners L.P. The transaction was brokered by Jones Lang LaSalle Inc. managing directors Al Cissel and Scott Melnick.

The 376-unit garden-style apartment community is located at 13831 Castle Blvd., near Columbia Pike and Briggs Chaney Road. The complex was constructed in 1981 and was most recently renovated in 2006. Its amenities include a swimming pool, business center and fitness center.

The list of recent important multifamily transactions in the greater Washington, D.C., area also includes Rockville’s 564-unit Avalon Decoverly and Arlington’s 828-unit Crystal House. AvalonBay Communities Inc. sold both properties for a total of $332 million. Last week, Keith Loria reported on Multihousingnews.com on the record-setting sale of the Archstone Crystal Towers in Arlington. At $322.25 million, the 912-unit apartment community went for the largest sum ever paid for a single multifamily property in the region. In addition, the JBG Cos. acquired the 450-unit Falkland Chase apartments in Silver Spring for $98 million, while Waterton Associates sold its Aston Woods apartment community to Azure Partners for $40.8 million.

Rendering courtesy of The District

450-Unit Silver Spring Apartment Community Sells to JBG

By Adrian Maties, Associate Editor

The JBG Cos., a Chevy Chase-based private real estate firm that develops, owns and manages office, residential, hotel and retail properties, has acquired the Falkland Chase apartments, a prominent apartment community in downtown Silver Spring. Home Properties of Rochester was the seller.

Falkland Chase is a 450-unit apartment community located at 8305 16th St., in the heart of one of Montgomery County’s busiest downtowns. It is close to the Silver Spring Metro station and a stop on the future Purple Line, as well as The Fillmore Music Hall, AFI Theater, Discovery Communications and an array of dining and shopping options. Amenities include fully equipped kitchens, fitness center, ceramic tiles in baths, hardwood floors and more. The community is also pet friendly.

“Falkland Chase is a great addition to our residential portfolio,” said David Paul, a JBG partner, in a statement to the press. “This is a well-located, transit-oriented community that we are proud to own. We are committed to providing excellent customer service to the residents at Falkland Chase from day one.”

Home Properties retained Jones Lang LaSalle Inc. to market the property. The price of the transaction has not yet been disclosed.

JBG has more than $10 billion in assets under management and development in the Washington, D.C., area. The company invests almost exclusively in urban-infill, transit-oriented developments. Its portfolio includes nearly 7,000 apartments among its 30 million square feet of office, residential, hotel and retail space. The Veridian apartments and the Silverton condominiums are JBG’s most recent developments in Silver Spring.

The Silver Spring apartment market has seen some action this past week. On March 28, Waterton Associates sold its Aston Woods apartment community to Azure Partners for $40.8 million. Aston Woods is a 261-unit community that was built in 1986. The asset is 94 percent leased and has seen almost $3 million in capital improvements during the past five years.

Photo credits: www.falklandchase.homeproperties.com

Charts courtesy of Marcus & Millichap.