Armada Hoffler Sells Maryland Property for $150M

The Residences at Annapolis Junction. Image courtesy of Armada Hoffler

Armada Hoffler has sold The Residences at Annapolis Junction, a 416-unit suburban mid-rise apartment community in Howard County, Md., for $150 million as part of the REIT’s plan to dispose of up to $200 million in non-core assets.

The buyer of the 13.8-acre community at 10125 Junction Drive in Annapolis Junction was not disclosed.

Armada Hoffler acquired the property in November 2020 from developer Somerset Construction Co. in an off-market deal. The REIT had previously been the mezzanine lender to the developer and was able to acquire full control of the asset that was completed in 2017. In connection with the November 2020 acquisition, the firm refinanced the property with a 10-year, $84 million agency loan that was interest-only for the first three years and had an interest rate of 2.7 percent annum.

Lou Haddad, president & CEO of Armada Hoffler, said in a prepared statement that with the sale of The Residences at Annapolis Junction the REIT has completed the disposition of $177 million of noncore assets at a blended 4.1 percent exit cap rate. Haddad said the firm had set a goal last quarter of selling up to $200 million of noncore assets at cap rates in the mid 4 percent cap range. He said in less than three months Armada Hoffler exceeded its price target. The proceeds generated by the sale of the noncore assets will satisfy the REIT’s equity needs for the remainder of the year and possibly well beyond the end of the year. Haddad said the transactions allow Armada Hoffler to execute on its current development pipeline without accessing the capital markets.

In April, Armada exited the student housing sector with the sale of Summit Place, a 357-bed property in Charleston, S.C., to an undisclosed buyer. Earlier in April, the REIT closed on the sale of Hoffler Place, another student housing community in Charleston. Last year, Armada Hoffler sold a 567-bed student housing property in Baltimore to Johns Hopkins University.

Haddad said at that time REIT would be using the proceeds for development and acquisition opportunities with conventional multifamily, mixed-use or grocery-anchored shopping centers.

Annapolis Junction Details

Armada Hoffler said The Residences at Annapolis Junction, a LEED Gold-certified property, was 97 percent occupied at the time of the sale. The apartment community was the residential component of Annapolis Junction Town Center, a mixed-used transit-oriented development situated  next to the Savage Maryland Railroad Commuter Rail (MARC) station. Located midway between Baltimore and Washington, D.C., the property is also near Fort Meade, the National Security Agency and BWI Marshall Airport, and has convenient access to I-295 and Amtrak.

The asset has studio, one- and two-bedroom layouts with rents ranging from $1,712 to $3,838 and an average of $2,355, according to Yardi Matrix data. Unit sizes range from 521 square feet to 1,629 square feet and 32 apartments are affordable. Apartments feature washers and dryers in all units, above-standard ceiling heights, hardwood floors and private balconies or patios in select units. Community amenities include a swimming pool, clubhouse, fitness center, business center, theater and pet spa. There are 650 parking spaces available in a multi-level structure and electric charging stations.