SUITLAND, MD-Rockville, MD-based developer the Donaldson Group and equity partner Angelo, Gordon & Co., in New York City, have made another value-add multifamily acquisition in the area: Pinewood Chase--a 492-unit building here, in which the two will invest an additional $12 million to renovate. The purchase price is $27.4 million.
The seller was the Lightstone Group, also based in New York City. It was represented by Transwestern’s Dean Sigmon and Robin Williams (who alluded to the sale in an earlier interview with GlobeSt.com). Meridian Capital Group helped secure financing for the acquisition via the New York Community Bank.
The Donaldson Group and Angelo, Gordon & Co. have been teaming up for similar deals in the DC area. Most recently, they acquired Regency Pointe, a 599-unit apartment community in Forestville, MD, that will require a $16 million renovation. In December 2010, they acquired Heather Hill, a 459-unit apartment community in Temple Hills, MD, which will be repositioned via a $8.5 million rehab. “We see a great deal of opportunity in this space, obviously,” Carlton Einsel, EVP with the Donaldson Group, tells GlobeSt.com. “Right now the environment for value add is better than it has been in several years.”
That said, he adds that it can be a tricky environment to navigate and an investor can easily overpay. “You could wind up with too high a basis in the field or having to cut back on necessary renovations,” he says. Donaldson plans to hold these properties for roughly three to five years and hope to achieve 20% plus returns at the time of sale.
The $12 million renovation program for Pinewood Chase is a case in point: an ambitious repositioning, it includes replacing the building’s systems and giving the two sections that comprise the community their own identity. The group of garden apartments located at 5601-5633 Regency Park Court, with frontage on Suitland Road, will be called Andrews Ridge. The section at 3800-3838 Regency Pkwy will be called The Arches at Andrews Ridge. There are 36 garden apartment buildings all together, situated on 22 acres of land. Other upgrades will include a new clubhouse with a fitness center, business center, and leasing office, new facades for the buildings, new balcony railings, roofs and upgraded kitchens and other fixtures.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
