(To read more on the multifamily market, click here.)
RESTON, VA—Ross Development and Investment, a Bethesda, MD-based firm, has acquired a class B 258-unit garden apartment community in Reston, Va. for $40 million, or $155,039 per unit, from Virginia-based Comstock Home Building Companies Inc. Carter Lake Apartments is located on Becontree Lake Drive off North Shore Drive. The seven building complex also has a pool, clubhouse, fitness center and tennis courts.
Comstock originally acquired the property in early 2005 from RREEF with the intention of converting it into a condo property, Coldwell Banker Commercial Ideal Realty Group team leader Dean Sigmon tells GlobeSt.com. Sigmon says Coldwell approached the company early this fall with the buyer's proposal. Comstock had already started the conversion process, renovating six units. It had collected deposits from some tenants, but hadn't ratified the contracts. When the decision was made to sell the asset to Ross Development, those deposits were returned. The deal concluded within 45 days. Ross's equity partner in the transaction is Rockville Capital, based in New York, Sigmon says.
Ross Development plans to reposition the property to class B plus or A minus, he says. "This is what I would call a class value-add play. The building fundamentals are great. It is the common areas, hallways, interiors in some apartments that need upgrading." He says that Ross Development is likely to invest $5 million in the enhancements.
The company hopes to raise rent to $1.75 per sf from its current $1.40 per sf. Rents in Reston, a high tech enclave in Northern Virginia, can exceed $2 per sf with renovated product, Sigmon says.
Surprisingly, given the cooling condo conversion market, Sigmon found only one other comparable project while working this deal. Earlier this Fall, he says, Chicago-based Equity Residential acquired a property in Alexandria, Va., from Monument Realty that had originally been slated for condo conversion.
Sigmon says Coldwell is working on a second conversion reversion transaction in Pikesville, MD. "We have two others in the pipeline as well."
Coldwell Banker Commercial Ideal Realty Group represented both parties in the transaction.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
