Starwood, Bainbridge JV Bags Apartment Portfolio in Hot Metro D.C. Market

Washington, D.C.--Starwood Capital Group Global and Bainbridge Companies have acquired seven apartment communities in metro Washington, D.C.
Reserve at Regency Park Apartments

Washington, D.C.–A joint venture between affiliates of Starwood Capital Group Global and Bainbridge Companies L.L.C., and an unnamed institutional investor, have acquired seven apartment communities in metro Washington, D.C. The acquisition includes a total of 1,626 apartment units mostly in Virginia, but also one property in Maryland.

The JV secured seven-year financing from Freddie Mac at 4.87 percent to acquire the portfolio, though the participants are remaining mum about how much they spent. It’s clear, however, that D.C. and environs represent one of the hottest apartment markets in the country. According to Delta Associates, the research arm of Transwestern, D.C.-area apartment vacancies have been trending down as rents rise.

Specifically, according to Delta, the vacancy rate for Class A and B apartments stood at 3.8 percent as of the first quarter of 2011, compared with 4.1 percent in 1Q10. Rents for both those classes of apartments increased 7.8 percent during the 12 months ending in March, which happens to be twice the long-term average rate of increase. Because the area’s job market is relatively healthy, demand is there for D.C. apartments, but new supply–some of which is now underway–lags because few developments were possible during the worst of the Great Recession.

The Virginia properties in the portfolio include Amberton Apartments (190 units) in Manassas; the Reserve at Regency Park Apartments (252 units) in Centreville; Westfield Village Apartments (228 units) in Centreville; Saddle Ridge Apartments (216 units) in Ashburn; the Reserve at Towne Center Apartments (290 units) in Potomac Falls; and Woodside Apartments (252 units) in Lorton. The lone Maryland property is Clary’s Crossing Apartments (198 units) in Columbia.

The properties date from between 1987 and 2002, and the units involved in the acquisition average about 950 square feet each. The JV plans to remodel and upgrade the properties, allocating about $300 million for the acquisition as well as the renovations. The remodeling and upgrade program will involve amenities, interiors, exteriors, landscaping and signs. Bainbridge Management will manage the properties.