Two Separate Multifamily Transactions Trade for $126M

WASHINGTON, DC-Two multifamily properties have traded in the greater Washington area in separate transactions for an approximate aggregate of $126 million. They are: Sherwood Crossing, a 634-unit rental apartment community at 6731 Old Waterloo Rd. in Elkridge, MD, for approximately $72 million; and Riverside Station Apartments, a 304-unit luxury multi-housing community in Woodbridge, VA., for $54 million.

While there are unique elements to both deals--one of which was negotiated several months ago--they do illustrate that cap rates continue to drop for multifamily transactions.

HFF’s Dave Nachison and Alan Davis marketed Riverside Station Apartments on behalf of Principal Global Investors. Associates Estates Realty Corp. purchased Riverside Station for cash. Located at 1411 Big Crest Ln., it is 95% leased.

Levin Realty Advisors, LLC, based in Chicago, purchased Sherwood Crossing from Rreef. The CB Richard Ellis Washington DC Multi-Housing Investment Properties group of William Roohan, Michael Muldowney, Andrew Boyer, Michael Rudolph, Brian Margerum and other team members brokered the transaction. Built in 1988, Sherwood Crossing is 95% leased, with more than half of the units renovated.

The latter deal was negotiated in January, Muldowney tells GlobeSt.com. "Since then we have seen cap rates come down even further from the 6.6% cap rate after reserves on this transaction." He says that the per forma cap rate reported by the buyer is 6.9%. The transaction required the assumption of Howard County housing revenue bonds that were equal to $24 million plus $27 million in supplemental. It took five months for the deal to close because Howard County had to pass a resolution for the financing. "It was a widely marketed property and we got several offers for it."

Industry sources put the Riverside Station Apartments cap rate in the mid-5% range. While declining to comment on the specifics, HFF’s Nachison tells GlobeSt.com that cap rates are clearly continuing to drop, with the market posting a 75 basis point compression in the past six months. This particular deal also speaks to scramble by real estate investors to take advantage of BRAC-related shifts, Nachison adds. "Riverside is right on the VRE train line in between Ft. Belvoir and Quantico."

Another common factor of these two trades is that they illustrate investors’ growing willingness to take on large deals, Ari Firoozabadi of Marcus & Millichap Real Estate Investment Services, tells GlobeSt.com. "There is more appetite for substantially larger transactions than there was two months ago."