(Read more on the multifamily market.)

ALEXANDRIA, VA-Waterton Residential and CalSTRS have purchased a former condo conversion complex for $70.5 million. Called the Ridgeleigh at Van Dorn, it is a 314-unit garden apartment complex that was originally developed by Washington Communities as a 360-unit rental community in 1995 and then converted into condominiums in 2006.

In mid-May the complex went into foreclosure. Waterton purchased Ridgeleigh from the foreclosing mortgage lender, Fremont Investment and Loan. Since 46 condo units had already been sold, the purchase included the remaining 314 units. Coldwell Banker Commercial Ideal Realty Group served as the broker in the transaction.

Waterton plans to spend $4 million on capital improvements renovating the apartments as well as updating the exterior. This transaction is the Chicago-based company’s second purchase of a failed condo conversion in the DC metropolitan area in the past three months. The first acquisition was Bellemeade Farms in Leesburg, VA, which was reported in GlobeSt.com.

“This acquisition fits our strategy of purchasing well-located, high-quality properties at a large discount to replacement cost,” says Rick Wise, senior vice president of Waterton Residential, in a statement. “The acquisition of fractured condo conversion projects is complex, but it enables us the opportunity to make investments in superior multifamily assets such as Ridgeleigh at Van Dorn and Bellemeade Farms.”

Ridgeleigh was acquired by Waterton Residential Property Fund IX, a $461-million fund that has been leveraged to purchase up to $1.3 billion of real estate. Fund IX’s investment target is opportunistic acquisitions with a focus on the distressed condominium market.

Certainly there are growing opportunities for such investments, Coldwell Banker team leader Dean Sigmon tells GlobeSt.com. “Fractured condo conversion are a good value add opportunity for investors. They are typically located in great in-fill locations for instance and well maintained.” It is for these reasons, Sigmon says, that institutional investors are increasingly targeting these assets.

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