FAIRFAX, VA—Value-add multifamily deals are still feasible for buyers even as pricing rises to $200,000 a unit in some cases. So says ARA's Drew White who has closed two deals here totaling close to $100 million in recent days and has another $80 million across two deals rolling out in the next 30 days in Northern Virginia.
"There is a continued high interest in value-add opportunities, especially in Northern Virginia—despite the large pipeline of new Class A product," White says.
While Class B rents are stagnating and vacancies inching up for this asset class, the rent differential between Class B and Class is not inconsequential – and it is enough to make the numbers work for a rehab of a Class B property, White says.
Consider one of his recent deals that we reported yesterday: Infinity Apartment Homes in Arlington, VA traded for approximately $43.5 million, or $191,630 per unit. The 227-unit, five-story building is located at 955 S Columbus St.
The rent differential for Class A product in that part of Arlington is about $627, White says.
Another deal White recently closed was Bell Partners' purchase of Fair Oaks at Pender Creek, which we also reported earlier this month. A source tells us it traded for roughly $55 million approximately, or slightly more than $210,030 per unit; White declined to discuss the pricing.
In that case Bell Partners acquired a value add property from Clarion Partners that was already in the process of being rehabbed. The improvements Clarion made had led to rental rate growth of $140 to $150 per unit, White say. Pricing was still competitive for Bell to acquire the property and continue to harvest gains from additional value add improvements, he says.
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