Chesterfield County’s multifamily real estate market drew upwards of $165 million in deals last week, driven in part by so-called 1031 exchanges.
In one of the biggest multifamily deals seen in metro Richmond in recent years, the 457-unit Rivermont Crossing development, consisting of the 312-unit Rivermont Station apartments and 145-unit Rivermont Landing townhomes, sold Sept. 18 for a combined purchase price of $79.75 million.
Both properties, developed in the late 2000s by Virginia Beach-based Boyd Homes, sold to an entity tied to The Stephen A. Goldberg Co., a Bethesda, Maryland-based real estate firm that paid $47.85 million for the apartments and $31.9 million for the townhomes, according to county property records.
A county assessment most recently valued the two properties at $42.98 million and $28.62 million, respectively, putting the total assessed value for Rivermont Crossing at $71.6 million.
ARA Newmark’s Wink Ewing, Mike Marshall and Drew White represented Boyd Homes in the transaction, which Ewing said involved a 1031 exchange for Goldberg. Such exchanges allow sellers to transfer proceeds from the sale of a comparable property to another property while deferring capital gains taxes.
“They had a large 1031 exchange requirement that fit very nicely for this,” Ewing said, deferring specifics to Goldberg. A call to Goldberg’s Joel Hochman was not returned Tuesday.
Ewing said such exchanges are driving a lot of multifamily deals locally, in that sellers are required to buy replacement properties within a set amount of time, giving them an added motivation to outbid competing offers. Since its listing earlier this year, Rivermont Crossing had attracted confidentiality agreements from over 120 parties, Ewing said.
“They’re driving the market right now,” Ewing said of the exchanges. “They tend to be able to outbid normal, yield-conscious buyers in those situations, because they’re about preserving capital and at least not paying taxes today, deferring them to another time. It’s not about yield, necessarily, going in.”
Ewing said the townhomes and apartments were 97 percent occupied when the transactions closed.
Axis 147 sells for $40M
The day before the Rivermont sale, a local buyer on the other side of 1031 exchanges added to its portfolio of investment properties with the purchase of the Axis 147 apartments for $39.5 million. The 296-unit complex is located behind Huguenot Village Shopping Center near Chesterfield Towne Center.
The buyer was Capital Square 1031, a Glen Allen-based firm that purchases commercial and multifamily real estate and sells ownership shares in each property to pools of investors through 1031 exchanges.
The seller was Huguenot Associates LLC, a partnership between Dallas-based Lincoln Property Co. and Arlington-based Ritz Banc Group. They were represented in the transaction by Colliers International agents Will Mathews, Carter Wood, Jason Hetherington and Bruce Milam.
Louis Rogers, CEO of Capital Square 1031, said Axis 147 was attractive to the company for its location in its home market and recent upgrades, with $3.6 million invested since 2015 in a new clubhouse and other improvements to the property, which was built in the 1970s.
“The seller spent a lot of money making it nearly perfect, and it’s surrounded by some of the best retail and some very wealthy neighborhoods,” Rogers said, adding that Axis 147 adds to 70 other properties in the company’s portfolio across the country.
Capital Square’s recent purchases have included the Mayton Transfer Lofts in Petersburg, while the company, in acquisition mode up to that point, unloaded its first property in August with the sale of an apartment complex in Tampa, Florida.
The company plans to rename Axis 147 as the Summit at Bon Air and will renovate some unit interiors. It is keeping on BH Management Services to manage the property. The property was 96 percent occupied and more than 97 percent leased at closing.
Aden Park & Glenway Green sell for $47M
While not involved in a 1031 exchange, another Chesterfield apartment property sold last week in an eight-figure deal.
Aden Park & Glenway Green, a 50-year-old property totaling 538 units at 435 German School Road, sold Sept. 21 for $46.55 million.
The buyer was Hivernan Realty Group, a Colorado-based real estate firm that owns two other properties in the Richmond market: the 278-unit Rollingwood Apartments and the 192-unit South Pointe Landing Apartments, both in Chesterfield.
The seller was an entity tied to Weinstein Properties, a Glen Allen-based firm whose local properties include the nearly 700-unit Kings Crossing apartments in Henrico County.
Colliers’ Austin Weathington and Jason Hetherington joined Mathews and Wood in representing Weinstein in the sale. Wood said the 50-year-old property was 97 percent occupied at closing and attracted interest from investors in outside markets seeking better capitalization rates – a property’s rate of return on investment based on the income it generates.
“We’ve been seeing that, despite rising interest rates, prices are still continuing to rise,” Wood said. It’s not having as much of an adverse effect yet.”
Regarding the 1031 deals further driving the local market, Wood added: “They’re taking advantage of the momentum rolling from the multifamily market, especially in Richmond. We have some of the strongest rent growth of anywhere throughout the state of Virginia.
“With how that continues to look going forward, it’s a no-brainer for a lot of people to start looking into multifamily investment – especially trying to escape those compressed cap rates in Tier 1 markets, starting to turn to places like Richmond.”
It’s a very fortunate time for all of us brokers in the apartment community business. If we stick to our knitting and work hard, we’ll find the buyers, and that’s certainly been the case so far. The Richmond market is hot for development and investment.