Developers fetch nearly $5M for newly built Monument Ave. apartments

3900 monument

The apartment building at 3900 Monument Ave. has been sold for over $4 million. (BizSense file photo)

A year ago, Yogi Singh called his shot.

He went out on a limb last June, declaring that the Richmond apartment market may have been approaching a peak. He decided to test that theory by listing his firm’s newly built development at 3900 Monument Ave. for sale just as construction was completed.

It turns out he may not have been too far off the mark.

Singh and his investor group last week sold their 15-unit apartment building for $4.85 million. That’s $323,000 per unit. The deal was recorded May 23.

Yogi Singh

The buyer was B.R.J. Virginia LLC, a group run by Charlottesville-area resident Susan Ould and her husband. It adds to their existing Richmond holdings.

Singh’s group bought the half-acre property for $640,000 in June 2017, when it housed an aging medical office building. He said they then pumped under $3 million into building the modern-design apartments.

They enlisted broker Charles Wentworth of Colliers International to field prospective buyers.

“We had strong interest and also had really competitive refinance options in front of us,” Singh said. “Frankly, before Susan stepped up to the plate, we were thinking of refinancing. It wasn’t an asset we were afraid to hold on to.”

He said offers came in from all over the East Coast and that even they were surprised at the price tag in the end. At $323,000 per door, while on a smaller scale, the deal eclipsed that of the 339-unit Flats at West Broad Village that sold in March for $224,000 per door and the $221,000 unit price fetched by James River at Stony Point last fall.

“It’s a strong reflection on the Richmond market,” Singh said of the price tag, adding that attorney Elizabeth Carr of Williams Mullen worked the deal on their behalf.

The 1,100-square-foot units have two bedrooms and two bathrooms. (BizSense file photo)

Factoring into the sales price, he said, was the fact that all the units are two-bedroom with balconies and offer an optional parking space. And the location was a factor, with walkability to Scott’s Addition and the Museum District.

Susan Ould said the deal is a 1031 exchange, prompted by the sale of another of her firm’s properties in Charlottesville.

It adds to Ould’s Richmond holdings, which also include the 50-unit Lava Lofts in Church Hill and the 30-unit Railroad Y Lofts in Shockoe Bottom. Her company paid $8.27 million and $4.57 million, respectively, for those properties in 2014.

“We wanted to have all our properties in Richmond,” Ould said. “It’s better for our business and our staff to have everything in one place.”

Ould said they don’t have any plans for the Monument property for now, other than to manage it as is. She said the building’s 15 units are fully leased and rent for an average of around $2,000 per month.

“We’re just trying to get to know the building better and get to know the residents,” she said.

With the sale behind them, Singh’s group now looks ahead to its next project in Scott’s Addition. They’re planning to redevelop an old office building at 3117 W. Clay St. into modern office space. They paid $1.26 million in January for the two-story, 11,200-square-foot building and one-third acre.

Singh said they are still in the design phase and are contemplating adding more square footage to the building.

As for whether he was right about the Monument deal and whether he’s getting out as the market is peaking, Singh said only time will tell.

“I don’t have a crystal ball,” he said.

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David HumphreyJustin ReynoldsEd ChristinaDaniil KleymanRichard Rumrill Recent comment authors
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Bob Fishman
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Bob Fishman

Can anyone comment as to how this price tag makes sense if each unit is renting for $2k? Do they think rents will skyrocket so that this building will have positive cash flow at some unknown date in the future ? Or are they in the black effective day one – if so, how?

William Muse
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William Muse

Any deal can look good on a spreadsheet, but at this valuation its hard to see any meaningful profitability in the short term. Congrats to the sellers – its a great win for them…

Daniil Kleyman
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Daniil Kleyman

If you assume a 30% expense ratio, then this is a 5.2% cap purchase. Sub-5% if they’re significantly above 30% expenses. It’s likely 1031 money, which means its probably unleveraged. So the buyers are earning a half-decent rate on their money. If they were leveraged, cashflow would be terrible. Certainly nothing that resembles a home run, but it’s a nice safe purchase on Monument Ave. New construction, Class A asset. Safe place to park money.

charles Frankenhoff
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charles Frankenhoff

new build so should start off a little lower on expenses I’d guess, but yeah, a place to park money. That income stream is a bit risky though if we have a slowdown, though I think it’s safe over a long term horizon.

Alevander Wand
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Alevander Wand

The article mentions it is a 1031 exchange.

Bob Fishman
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Bob Fishman

What are your thoughts on the price from a fundamental perspective? Ie what is the point of doing a deal if you overpay and erase the benefit of using 1031 in the first place ? Do you think this deal makes sense if you remove 1031 from the set of variables ?

Daniil Kleyman
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Daniil Kleyman

Bob – I personally wouldn’t have paid that price but I also just don’t believe in buying anything at market value. Even in 1031 exchanges. But I can see why this made sense for the buyers. They probably cashed out a ton of equity and gains in another property and now all that equity is earning 5% with (hopefully) upside for the future from inflation/rent growth. To each their own.

charles Frankenhoff
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charles Frankenhoff

my mind is boggled by that price per unit west of 195. 7.4 gross cap rate, so say 5.5 net? Better than I expected, but I still think the limited options for a 1031 probably drove this. Especially in what I’d still call an inconvenient location

Richard Rumrill
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Richard Rumrill

Charles, your comment that being West of 195 makes the location inconvenient brings up some questions. How important is it for these apartments to be zoned for the strongest elementary school in the city? How much more ‘urban’ will this area be as Libby Mill continues to develop? How likely is it that ‘Scott’s addition 2.0’ in Henrico will actually do better than the ‘real thing’ in the city. How much will urban oriented folks move West if the city continues to excell at attracting entertainment while floundering with schools? How about a great library like Libbie Mill, could that… Read more »

Ed Christina
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“How likely is it that ‘Scott’s addition 2.0’ in Henrico will actually do better than the ‘real thing’ in the city”? Based on how much better the county has done on pretty much everything else, I have to think 2.0 will do better. First, they can learn from the mistakes made the first time. Second, being as close to Scott’s as they are, its a much easier cognitive adjustment. And the biggest reason is how much easier it is to get permits and services from the county. They do need a better name, unless the just want to start calling… Read more »

Justin Reynolds
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Justin Reynolds

Henrico County’s “Scott’s Addition 2.0” idea doesn’t add up between the lack of a street grid, the businesses there generally being successful already, and the land parcels are mostly quite large (partly due to the lack of a grid). That area of Henrico can certainly benefit from adding components Scott’s Addition possesses now, but it would push out a lot of businesses and the city/property owners would have to agree to open up the street grid from Broad St to make it accessible/walkable.

David Humphrey
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David Humphrey

One could argue that opening up “streets” could make it less walkable as it would allow more places for cars to interact with pedestrians. They could come up with pedestrian corridors that are devoid of cars and make it even more walkable. I think the larger tracts are an advantage because things could be planned better. Even many of the existing businesses have excess parking lot space they could sell off and profit from if this comes to fruition. Libby Mill is an example of how to do things well in my opinion. If they build on that in this… Read more »

Justin Reynolds
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Justin Reynolds

David, that’s not how urban planning works and there isn’t anything walkable about Libbie Mid-Town—its a sea of parking lots with one parking deck inside the apartment building. When it’s done it’ll be a bedroom community with a library and a few shops, but that’s it. West Broad Village is the best suburban example of what a walkable community looks like. I currently work in the Scott’s Addition 2.0 area and every building is very low density. The area just lost one of its only restaurants when PPD took over Pelon’s lease as part of their expansion efforts. Businesses can’t… Read more »

David Humphrey
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David Humphrey

I respectively beg to differ. Building more streets for cars does not equal walk ability. The Ballston area of Arlington is a great example. In the middle of a series of blocks they constructed an extensive pedestrian avenue on what they could have made an alley. They turned the activity away from the automotive roads inward towards a pedestrian street. Works great because you don’t have to sit on a patio next to a busy noisy roadway like if you are sitting on the patios of the restaurants next to broad street in west broad village. As for it being… Read more »

Justin Reynolds
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Justin Reynolds

David, Ballston is walkable, but the area you mention only exists due to the Ballston Metro stop. Otherwise it wouldn’t be a central gathering space that works without cars. This is Richmond and car use is inevitable until we reach a density great enough to support a more robust mass transit system. Sadly, this won’t be true any time soon even if I wish you were right. As for Libbie Mill there’s a big difference between what a developer wants to build and what they actually build. Gimmenick has yet to land a major office tenant for new construction and… Read more »

David Humphrey
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David Humphrey

Yet you say West Broad Village is the best example of walkability it was built without even being on a regular bus route. At least this section of Broad has the Pulse and other bus services. I never said Libbie Mill would attract large amounts of commercial, but no matter what uses it ends up attracting I still think it will be more walkable than almost anything else out there and is a good example of how to create a walkable community.