WASHINGTON, DC–Randle Hill, a 17-building, 196-unit market-rate multifamily property located at 3300 6th St SE, close to the redevelopment of St. Elizabeths Hospital in Ward 8 and within a half mile of the Congress Heights Metro has traded to Community Preservation and Development Corp. Northern Virginia-based Gates, Hudson & Assoc., was the seller and represented by Ideal Realty Group.
In CRE shorthand, this deal was your standard 1031 exchange-affordable housing play. CPDC invested its own capital as well as secured funding from Community Housing Capital, National Housing Trust, Partners for the Common Good and Morgan Stanley Bank, which provided a 95% acquisition loan, according to Shelynda Burney-Brown, vice president of Real Estate for CPDC. Gates, Hudson sold the property as part of a 1031 exchange and it is already under contract for another property in the Virginia market, IRG President Cameron Manesh, who was also retained to identify an acquisition, tells GlobeSt.com.
So yes, this transaction type is common enough but if current trends hold true it will become even more familiar. Debt and equity has become more expensive following the presidential election, with mortgage interest rates about 50 to 60 basis points higher, Manesh says. “It is affecting sales prices across the board.”
Usually there is some volatility following an election but Manesh says he has been hearing talk of a 12-to-18 month window before stabilization sets in this time. “Anything under contract right now will be subject to some kind of retrade or negotiation I would suspect,” he says.
And going forward certain buyers will be more competitive than others, starting with 1031 exchange deals that are not subject to the changes in the capital markets. Foreign investors will be more competitive as bidders as well buyers that take on loan assumptions, Manesh says. “And of course anyone making an all-cash purchase.”
WASHINGTON, DC–Randle Hill, a 17-building, 196-unit market-rate multifamily property located at 3300 6th St SE, close to the redevelopment of St. Elizabeths Hospital in Ward 8 and within a half mile of the Congress Heights Metro has traded to Community Preservation and Development Corp. Northern Virginia-based Gates, Hudson & Assoc., was the seller and represented by Ideal Realty Group.
In CRE shorthand, this deal was your standard 1031 exchange-affordable housing play. CPDC invested its own capital as well as secured funding from Community Housing Capital, National Housing Trust, Partners for the Common Good and
So yes, this transaction type is common enough but if current trends hold true it will become even more familiar. Debt and equity has become more expensive following the presidential election, with mortgage interest rates about 50 to 60 basis points higher, Manesh says. “It is affecting sales prices across the board.”
Usually there is some volatility following an election but Manesh says he has been hearing talk of a 12-to-18 month window before stabilization sets in this time. “Anything under contract right now will be subject to some kind of retrade or negotiation I would suspect,” he says.
And going forward certain buyers will be more competitive than others, starting with 1031 exchange deals that are not subject to the changes in the capital markets. Foreign investors will be more competitive as bidders as well buyers that take on loan assumptions, Manesh says. “And of course anyone making an all-cash purchase.”
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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.
