(To read more on the multifamily market, click here.)
GREENBELT, MD-The Bozzuto Group and the New York State Teachers' Retirement System have pooled $100 million of equity, which will be leveraged to support the development of $400 million in multifamily projects throughout the DC area as well as in Pennsylvania, Delaware and New Jersey over the next three years.
Construction has already begun on the joint venture's first project, which is in Northern Virginia. Called Woodland Park Crossing, it is luxury 204-unit facility that is part of a mixed-use town center in the Dulles Corridor.
Principal Tom Bozzuto tells GlobeSt.com that the fund has a number of other projects in the development pipeline. "We are looking at class A, mixed-use or purely residential high rises. They could be transit-oriented projects and are most likely to be in dense locations."
Returns on the three-year fund are expected to be in the high teens, he says. NYSTRS has put up 95% of the equity with the Bozzuto Group kicking in the remainder. The fund expects to develop between five to seven projects, depending on the projects' size.
Bozzuto says now is an ideal time for multifamily investments in the DC area. "With the slowdown in the condo business, the ability to put apartment projects together is greater today than it was two years and probably six months as well."
Demand is strong for the product he says, despite the temporary softness due to the shadow market created by owners that rent out their property when they can't sell it. "That is creating a modest slowdown in demand now but overall the demographics in this area for apartments are extraordinary."
The Bozzuto Group and NYSTRS have pooled funds before to develop the Montgomery at Wheaton Metro, a 243-unit multifamily in Wheaton, and the Delancey, a three-building, 241-unit class A apartment property in Arlington, VA.
JP Morgan Investment Management coordinated the structuring of the joint venture. It also serves as the advisor for NYSTRS.
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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.
