NHP Foundation Buys Suburban DC Property for $54M
The sale is the latest transaction in the previous owner's dissolution.
The NHP Foundation has closed on the acquisition of Hadley Germantown, a 218-unit affordable housing community in Germantown, Md., a far suburb of Washington, D.C. The asset traded for about $53.7 million, according to SEC filings by seller Elme Communities.
The buyer financed the acquisition with tax-exempt 501(c)(3) bonds. KeyBanc Capital Markets served as bond underwriter, with the Wisconsin Public Finance Authority as issuer and U.S. Bank as trustee. Winn Residential will be the new property manager.
The community, formerly called Elme Germantown, has been rebranded by the new owner. Originally built in 1990 and last renovated in 2011, the asset will be subject to covenants put in place by NHPF that will restrict future rents to 60 percent of the Area Median Income for half of the community’s apartments and 80 percent AMI for an additional 25 percent of the units.
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Following the purchase, NHPF plans to conduct capital improvements at Hadley Germantown, focusing on both interior and exterior enhancements of the units, as well as upgraded community spaces. Urban Atlantic and Rawson Square are overseeing the initial phases of the work.
Common-area amenities include a clubhouse, business center, playground, swimming pool and fitness center. Units feature walk-in closets, fireplaces and balconies or patios.
The financing structure leverages Montgomery County’s Payment in Lieu of Taxes program, which provides a 100 percent abatement of county property taxes for qualifying nonprofit-owned communities. The deal was made possible by using NHP Foundation’s AA- S&P rating to leverage debt at below 4.5 percent, foundation Senior Vice President of Acquisitions Neal Drobenare said in a statement.
Elme’s wave of sales
This latest sale is part of the dissolution of Elme Communities, a REIT that has been disposing of properties ahead of a planned shutdown. Last year, the company sold a 19-asset portfolio for $1.6 billion to Cortland Partners. The collection totaled 5,793 units.
More recently, the company sold three other assets besides Elme Germantown—Elme Sandy Springs, Elme Marietta and Elme Conyers and Elme Germantown, in addition to an office building for a total of $252.7 million.
The company has also inked a deal to sell most of its remaining assets—Elme Watkins Mill, The Kenmore, 3801 Connecticut Avenue and Riverside Apartments—for a total of $431.3 million, according to the filing. Negotiations are underway for the disposition of the company’s remaining property, Elme Bethesda.
