Friday, Aug. 15, 2008
New Jersey's Empire American Holdings has purchased the 2,877-unit Springhill Lake apartment complex in Greenbelt for $275 million, continuing a trend of strong investor interest in the region's rental housing market.
The price was not disclosed in June when the deal was struck with the seller, Apartment Investment and Management Co. — Aimco — but transfer papers and Bethesda real estate information company CoStar recorded it as $275 million. Aimco, of Denver, had been shopping around since January for an investment partner or a buyer interested in redeveloping the massive 1960s-era project as a mixed-use commercial and residential town center. But that plan appears to have been sidelined by Empire, given the dismal conditions of the single-family market.
"While we liked the significant redevelopment potential at Springhill Lake, the sales price was compelling," said David Robertson, president and CEO of Aimco Capital, during an Aug. 1 earnings conference call. "Obviously, the market for the single-family home market has deteriorated over the past year and so our opportunities there probably aren't quite as great as they were when we last discussed it. But that being said, we tested the market and found out that we could get very good pricing on the sale, and given the opportunity to buy back stock at such an accretive level, we decided it was the right thing to do."
In the second quarter, Aimco sold 41 apartment buildings with 12,902 units for $921.5 million. The company has three other Maryland apartment complexes on the market, all built in the 1970s and 1980s. They comprise 622 units in properties in Columbia, Largo and Annapolis.
Aimco had plans to demolish much of Springhill Lake and replace it with a pair of rental and condo towers and townhouses. The company already secured zoning approval to redevelop the 155-acre property with 5,800 residential units in a transit-oriented development next to the Capital Beltway and the Greenbelt Metro station.
But Empire said it plans extensive renovations and upgrades to Springhill Lake, which it has renamed Empirian Village. The company is considering installing an indoor pool and plans to build a fitness center.
"As the largest apartment property in the region, Springhill Lake represents a unique repositioning opportunity," said Scott Melnick of Transwestern's Institutional Multifamily Group in Bethesda, which represented Aimco in the sale. "Moreover, the property's superb location — located directly on the Capital Beltway, and footsteps from Metro and MARC rail — is impossible to duplicate."
Apartment market rises
as condos falter
Empire's plans reflect regional interest in upgrading existing rental housing as an alternative to investing in new condominium construction or conversions of apartment units, according to the Mid-Atlantic Condominium Report for Mid-Year 2008 released by Delta Associates and McWilliams Ballard, both of Alexandria, Va.
The analysis shows that rents continue to rise and vacancies are falling, especially in suburban Maryland, as people turn to apartments instead of buying condos.
Average rent for Class B apartments increased to $1,339, up 4.8 percent from a year ago. At the same time, vacancies fell by 30 basis points to 3.2 percent.
The report said that investors are pouring money into renovating existing B and C grade properties. It concluded that "these opportunities can be the most profitable where the rent spread is widest between Class A and Class B (or Class C) rents. Owners appear to be recognizing this, as Delta has noted an active renovation environment, especially in suburban Maryland and Northern Virginia."
Through the end of May, the report noted that there have been 11 Class B apartment sales in the region: two high-rise and nine garden properties totaling 4,886 units. The garden properties traded at an average price of $104,051 per unit and the high-rise sales averaged $233,141 per unit.
RMF Engineering moving
to UMBC tech park
RMF Engineering, a mechanical engineering company, has signed a lease to move its headquarters to bwtech@UMBC, the University of Maryland Baltimore County research and technology park next to its Catonsville campus, the college announced.
The company will occupy 28,000 square feet and will be the first tenant in the park's newest building at 5520 Research Park Drive. It will move in January from its Baltimore headquarters to the tech park next to the 107,000-square-foot building developed by Corporate Office Properties Trust of Columbia.
RMF, which maintains offices around the country, is nationally recognized for analyzing, planning and designing complex buildings and campus utility generation and distribution systems, and evaluating alternative energy systems. It employs about 100 people and plans to expand to 130 by the end of 2009.
RMF plans to collaborate with UMBC's College of Engineering and Information Technology by assisting in curriculum development, consulting with faculty, and guest lecturing in engineering courses.
This is the second building Corporate Office Properties developed at the park. The first is fully occupied by the U.S. Geological Survey.
Baltimore Crossroads@95
lands Danfoss Group
Danfoss, a U.S. division of the Danfoss Group, is relocating from White Marsh to Baltimore Crossroads@95, a 1,000-acre business park in Middle River, Baltimore County announced.
The Denmark company will transfer more than 230 employees to a new building to be built by St. John Properties of Baltimore. The company will take 46,200 square feet of the 51,000-square-foot property, slated for completion in March.
Danfoss Group provides controls, compressors and systems for air conditioning, industrial automation, hydraulic applications, heating, variable frequency drives for electric motors and industrial, commercial and domestic refrigeration.
It joins 12 other companies, including the headquarters office for BGE HOME and Alexander's Mobility, since Baltimore Crossroads@95 opened in 2006. The park is off the new extension of Route 43 between White Marsh and the Baltimore County waterfront, about a mile from the MARC station at Martin State Airport.
Once completed, Baltimore Crossroads@95 will feature nearly 5.5 million square feet of space, including 2.5 million square feet of research and development-flex-office space, 2.5 million square feet of manufacturing-industrial space and 500,000 square feet of retail.
Commercial real estate news items may be mailed to: Steve Monroe, The Business Gazette, 9030 Comprint Court, Gaithersburg, MD 20877; e-mailed to smonroe@gazette.net; or faxed to 301-670-7183.
