RICHMOND—When the Ritz Banc Group, a private equity and alternative asset manager, decided to step up its acquisition activity in the US two years ago, the DC market was a natural market for the company. It had deep ties with foreign investors, a group that tends to have an appreciation for core assets in a capital city. The company did find assets that met its criteria at first. Last year, for example, it acquired two offices in Chantilly's Avion Business Park on behalf of Saudi family office for roughly $20 million.
But since then the market environment has changed, making other nearby cities more attractive by comparison, managing director Nasr El Hage Jr. tells GlobeSt.com.
"The office market in DC is stagnant for us. We are more bullish on multifamily, but a lot of investors are chasing this asset class," he says. "The challenge is value-add properties in DC have become very competitive and cap rates very compressed." That is why, he continued, the firm moved into secondary markets such as Richmond and Charlotte.
The company struck pay dirt with the Huguenot Apartments, a 296-unit multifamily asset that sits on 27 acres in Chesterfield County, close to employment and retail centers.
Ritz Banc Group acquired the asset in a JV with the Lincoln Property Co. The majority limited partner in the deal is Ritz Banc's anchor investor, the Saudi family office.
The price was undisclosed but a source tells GlobeSt.com that is trading for around $30 million.
"Our operating partner liked it, we liked it, it was a great buy," El Hage says.
Where the company will buy next is difficult to say. The company hasn't given up completely on DC, El Hage says. "But given our national platform, we can source and underwrite deals in a number of cities such as Richmond."
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