Transwestern Enters Q1 with $62M in DC Deals

BETHESDA, MD-It is not surprising that  Transwestern’s Mid-Atlantic Multifamily Group is heading into Q1 with $62 million in deals under contract and with plans to bring another $100 million of properties to market soon. The company, after all, brokered what is believed to be the highest selling multifamily trade on a per-unit basis last year: the Chase at Bethesda Metro, a 122-unit luxury high rise that Equity Residential purchased from a venture between Rockwood Capital and ROSS Development & Investment, for $57 million or $467,213 per unit, according to industry sources.  “We think 2012 will be another solid year not only for us but for the multifamily industry in general,” Dean Sigmon, SVP and director of the group, tells GlobeSt.com.

Fundamentals in this asset class are strong, with the DC area clocking in with the third lowest vacancy rate in the country, behind New York and Philadelphia, Sigmon says. Pricing, not surprisingly, reflects that. Besides the high-water mark of the Chase, there was also last month’s acquisition by UDR and its joint venture partner, Kuwait Finance House of the 292-unit 1301 Thomas Circle, NW, in DC, for $154 million.

“Core assets are getting snapped up and investors are willing to pay for them,” Transwestern SVP Robin Williams tells GlobeSt.com. “Right now they’re trading in the low-to-mid 4-cap range.”

Transwestern’s pipeline includes an asset in Baltimore that is expected to close within a week or two. The firm is also planning to list three to four additional assets for a total of $100 million. Last year, the company sold 3,204 units in the area, for a total of $450 million.

Another boost to the multifamily sector is that Congress has given its de facto approval to keep Fannie Mae and Freddie Mac open for business for a good number of years. As part of the agreement to extend the payroll tax cut, fees will be increased on the GSE transactions.

“The lawmakers have essentially said the GSEs will be around for at least 10 years,” said Doug Bibby, president of the National Multi Housing Council, speaking at a webinar on Wednesday hosted by Humphreys & Partners.

“When they return to profitability the noise calling for their dismantlement will probably go down,” he predicted. It’s welcome news. Multifamily is probably in the best shape of all of the real estate asset classes and we have the GSEs to thank for keeping the industry strong through a tough period.”