X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

(To read more on the multifamily market, click here.)

LANDOVER, MD-NOVO Development, a local developer, has closed on a Section 8 multifamily property here with the intention of taking it market rate. Located at 3691 64 Ave. in Landover Hills, NOVO acquired the 60-unit, six-story Capital Towers asset for $2.9 million.

Rick Struse and Cullen Kilbane O’Grady, associates in Marcus & Millichap’s National Multi Housing Group, represented the seller, a local owner who was not disclosed.

Project-based Section 8 multifamily buildings rarely are brought to market rate, O’Grady tells GlobeSt.com. There were no comparable sales; the closest to this sale was a September trade of the Greenbelt-based Lawrence Apartments. This 48-unit property sold for $3.1 million.

The repositioning will not happen right away. In addition to being a Section 8 project, the property also comes with a Section 236 loan, which restricts the rents that can be levied. The seller is obtaining new financing and within a period of time will be able to convert it to a conventional property, Struse tells GlobeSt.com.

Average rents in the building are below market rate by about $150 per unit, he adds. For instance the rent for a one-bedroom, one-bath unit is $550. The rent for a three-bedroom, one-bath unit is $681. Most of the units in Capital Towers are Section 8, 16 of the units are conventional. “That is where the upside is for the buyer–the rents that he can charge when the entire building goes conventional,” Struse says. There is 43,824 sf of total rentable space in Capital Towers.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

 

GlobeSt. Multifamily Spring 2022 (Formerly APTS)Event

Join 1000+ of the industry's top owners, investors, developers, brokers & financiers at THE MULTIFAMILY EVENT OF THE YEAR!

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt
Live Chat

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.