Sept. 04--NEWPORT NEWS -- More than 900 units in four large-scale apartment communities across the Peninsula -- including one with a troubled past in Newport News -- have been acquired by two out-of-state companies.
A Colorado Springs, Colo.,-based real estate investment firm called Hartford at Riverwalk LLC recently purchased the Riverwalk Apartments at 541 Randolph Road in Newport News, said company spokesman Bruce Beck.
Officials closed on the 7.4-acre, 264-unit apartment complex on June 11, and plan to continue renovations on 100 one- and two-bedroom units within the property, which includes new appliances, flooring and cabinetry.
The average rents are set to start around $700 per month, according to property management officials, below the $896-per-month average rent for a one-bedroom apartment in the central area of Newport News, according to multifamily researcher Charlotte-based Real Data's second quarter 2014 report.
The investment firm, who purchased the property from Fannie Mae, secured a $5.2 million mortgage loan from Los Angeles-based Karlin Real Estate to purchase and rehabilitate the nearly 50-year-old apartment community, Beck said.
Karlin Real Estate specializes in financing various multifamily and commercial ventures across the U.S., including distressed properties like Riverwalk.
"The buyer has a proven track record of acquiring and stabilizing value-add properties like Riverwalk," said Michael Hurst, Karlin Real Estate director of real estate lending. "Our loan allowed them to act quickly and take advantage of an excellent opportunity to buy an underperforming, but well-located multifamily asset, at far below replacement cost in a strengthening rental market."
Located in the south central quadrant of Newport News, Riverwalk Apartments is currently 27 percent occupied, well below the average 93.4 percent occupancy rate reported across the Peninsula during the second quarter of 2014, according to Carrollton, Texas,-based multifamily trend tracker and researcher MPF Research.
Riverwalk Apartments have also had a tumultuous past with area law enforcement.
In the mid to late 1990s, the apartment community went through a series of owners and managers, prompting a wave of unstable tenants, a backlog of building updates and property maintenance, and at times, a criminal element that thrived on drug dealing in the area.
Meanwhile, a Charlotte-based firm purchased three Class A apartment communities.
Ginkgo Residential, which owns a number of apartment communities across the Southeast, recently purchased Bridgewater on the Lake at 507 Marcella Road, and Lake Ridge at 900 Lake Ridge Road in the Coliseum District of Hampton from BIR Bridgewater LLC and BIR Lake Ridge LLC, respectively, said Philip S. Payne, CEO of Ginkgo Residential. The firm also purchased The Reserves at Arboretum at 5000 Reserve Way in the greater Oyster Point section of Newport News from the Berkshire Group.
In all, Ginkgo Residential owns 614 units in the anchor cities of the Peninsula: 282 two- and three-bedroom units on 15 acres at Lake Ridge; 216 one- and two-bedroom units on 12 acres at the Bridgewater on the Lake; and 143 one- two- and three-bedroom units on 7 acres at The Reserves at Arboretum.
All three communities in the Peninsula portfolio sold for a combined $85 million -- one of the largest multifamily sales in Hampton Roads this quarter, said Wink Ewing, principal broker with ARA Mid-Atlantic that brokered the transaction.
The Reserves at Arboretum is currently 99 percent leased at an average rent of $1,261 a month, according to sales documents. Apartments at the Bridgewater are also 99 percent leased for average rent of $1,005 a month, and units in the Lake Ridge apartment community are 97 percent leased at an average rent of $1,193 per month.
The firm plans to combine operations at its Bridgewater on the Lake and Lake Ridge properties, both of which are accessible via Marcella Road and are blocks from the Peninsula Town Center.
"We are excited to add these high quality, well maintained assets to our portfolio while expanding into a new market," Payne said. "We feel these properties are well suited to serve the workforce housing segment of the Hampton Roads area."
O'Neal can be reached by phone at 757-247-4744.
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