06/27/2012

Value-Added Apartments Near DC on Block

An Angelo, Gordon & Co. partnership is pitching five Class-B apartment properties in suburban Washington to value-added investors.

The 2,199-unit portfolio, spread out over the Maryland cities of Silver Spring, Hyattsville, Bladensburg and Forestville, is worth an estimated $300 million, or $136,000/unit. At that valuation, the capitalization rate would be between 6% and 6.5%. Investors can bid on individual complexes or the whole portfolio. Jones Lang LaSalle has the listing.

The properties, which are 95% occupied, were built between 1961 and 1986. Some units have been upgraded and now command higher rents. A buyer would likely look to renovate the remaining apartments.

The Greater Washington apartment market has been red hot since the recession eased. The average occupancy rate has rebounded to 96.3%, according to Jones Lang, and rents have averaged annual gains of 4% for the past five years.

Much of the investment activity so far has focused on relatively new properties in the city itself or its Northern Virginia suburbs. But over the past year, sellers have found growing demand for Class-B properties in further-out suburbs, as investors chase higher yields.

Angelo Gordon, a New York fund shop, owns the properties via a partnership with Federal Capital Partners of Washington. The complexes are among nearly a dozen in the Washington and Baltimore areas that the duo acquired from 2005 to 2008, focusing on Class-B properties ripe for renovation.

The listed properties are:

The 598-unit Penn Landing, at 6311 Pennsylvania Avenue in Forestville. Built in 1964 and partially renovated in 2008.

The 534-unit Ashford at Woodlake, at 14175 Castle Boulevard in Silver Spring. Built in 1974.

The 376-unit Woodvale, at 13831 Castle Boulevard in Silver Spring. Built in 1980.

The 449-unit Phoenix, at 5800 Annapolis Road in Bladensburg. Built in 1967 and renovated in 1986.

The 242-unit Toledo Plaza, at 3200 Toledo Place in Hyattsville. Built in 1961.

All of the properties have garden-style layouts except the Phoenix, which has three 10-story buildings.

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