Armada Hoffler Buys Maryland Luxury Property

The REIT had previously been a mezzanine lender to the developer and seller of the 416-unit The Residences at Annapolis Junction.
The Residences at Annapolis Junction. Image courtesy of Armada Hoffler Properties Inc.

Armada Hoffler Properties Inc. has expanded its Mid-Atlantic multifamily holdings with the acquisition of The Residences at Annapolis Junction, a 416-unit luxury property in Howard County, Md., 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 over the stabilized asset that was completed in 2018. In connection with the acquisition, Armada Hoffler refinanced the property with a 10-year, $84 million agency loan that is interest-only for the first three years and has an interest rate of 2.7 percent per annum.

Located at 10125 Junction Drive in Annapolis Junction, Md., the first renters moved into the 13.8-acre property in August 2017. The five-story apartment community was the residential component of Annapolis Junction Town Center, a mixed-use transit-oriented development (TOD) situated next to the Savage Maryland Rail Commuter Rail (MARC) station. It is also near Fort Meade, the National Security Agency and BWI Marshall Airport and has convenient access to I-295 and Amtrak.

The asset, which is 97 percent leased, has studio, one- and two-bedroom layouts with rents ranging from $1,553 to $3,147 and an average of $2,036, according to Yardi Matrix data. Unit sizes range from 521 square feet to 1,629 square feet. 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. The building is LEED certified Gold and has electric charging stations. The mixed-use property includes 100,000 square feet of office space and 17,000 square feet of retail.

Multifamily Activity

Louis Haddad, president & CEO of Armada Hoffler Properties, said in a prepared statement the acquisition is an immediately accretive transaction. Combined with the early October purchase of the 174-unit Edison Apartments in Richmond, Va., Haddad said the REIT’s multifamily portfolio has more than 2,300 units located primarily in Virginia, Maryland and North Carolina.  He said the REIT’s geographic focus continues to be the Mid-Atlantic and Southeast.

Armada Hoffler acquired the Edison Apartments for $25 million including the assumption of debt and issuance of operating partnership units. Originally built in 1919 as the headquarters for the Virginia Electric and Power Co., the historic property in downtown Richmond was renovated and repurposed in 2014. The transaction included a 365-space public parking garage that has dedicated space for Edison residents.

In September, the firm, which develops, builds, acquires and manages office, retail multifamily properties, announced it had entered into a joint venture with Terwillger Pappas to develop Solis Gainesville, a 223-unit multifamily development in downtown Gainesville, Ga. The $52 million project will include a public park and civic space. That project is expected to be completed in 2022.