WASHINGTON, DC–Urban Investment Partners has closed on Onyx on First, a 266-unit apartment building in the Capitol Riverfront for $95.5 million. UIP partnered with Atalaya Capital Management of New York City on the acquisition. Concurrently with the closing, UIP and Atalaya bifurcated the fee and leasehold, selling the fee to Safety, Income & Growth Inc. (SAFE) for $38.5 million and entering into a 99-year flexible ground lease.
“Ground leases are simply a better way for real estate investors to capitalize their projects,” said SAFE CEO Jay Sugarman in a prepared statement.
Located two blocks from Washington Nationals Park at 1100 First St., SE, Onyx on First was built in 2008 by Faison Development as condominiums, but was converted to rental apartments upon delivery, then sold in 2013. Institutional investors advised by JP Morgan Asset Management–Global Real Assets acquired the property from the Canyon-Johnson Urban Fund for $83 million.
The former ownership brought the property to market in 2016, with plans to sell in the fourth quarter of that year. Upon being notified of the impending sale, the building's tenants organized under the District's Tenant Opportunity to Purchase Act (TOPA). After hearing presentations from interested developers, the tenants assigned their acquisition right to UIP.
Under the new agreement, UIP has committed to installing cell phone repeaters in the building to improve cell phone reception. UIP also will expand and improve the outdoor kitchens on the building's roof deck, install dog runs, and other building enhancements.
“Although most TOPA renovations are in older buildings, it is not uncommon for a new building's residents to explore their TOPA rights,” says UIP Principal Steve Schwat in a prepared statement. He adds that many buildings erected in the 1980s are now showing their age, and are in need of these types of improvements.
Andy Weiss of Gem Equity structured the placement of the ground lease. Jacob Katz of Meridian Capital represented Capital One and Fannie Mae in placement of the debt.
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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.
