New landlord buys 150-year-old apartment building for $2.8M

A Henrico-based landlord bought a 150-year-old building with 27 apartments called the Exchange Alley Lofts at 8 S. 14th St. (Mike Platania photo)

Editor’s note: This story has been updated with additional information about the new owners of Exchange Alley Lofts. 

While hundreds of new apartments are being planned for Shockoe Slip and Shockoe Bottom, one of the neighborhoods’ older residential buildings has changed hands.

The Exchange Alley Lofts at 8 S. 14th St. sold earlier this month to a group of three out-of-town real estate investment firms: North Carolina’s Harvest Properties Group, New Jersey’s Tuson Properties and South Carolina’s J&S Realty Inc. The purchase price was $2.76 million.

With 27 units in the building, the sale amounts to just over $102,000 per door.

City records show the purchasing entity is tied to Henrico-based KRS Holdings, but Harvest’s Tim Vest confirmed that it was his group that purchased the building and that KRS will manage the property.

The seller was Midlothian-based Richmond Area Housing, which bought the property in 2017 for $1.5 million. The 150-year-old building had previously been renovated using Low Income Housing Tax Credits in the mid-90s.

The Exchange Alley building was most recently assessed by the city at $3 million.

Vest said his group may not be done buying into Richmond.

“At this time, we are involved with negotiations on a number of assets in the area and are actively seeking ways to grow and expand our presence and investment in the Richmond market,” Vest said in an email.

Richmond Area Housing owner Chau Cao said he sold the building because he was able to make a $1.3 million profit on it.

Cao said after he purchased the 13,400-square-foot building four years ago he did some minor renovations, including replacing all the flooring, which allowed him to increase the rent.

“The previous renovations made for really good bones. It was just worn down,” Cao said. “We were able to increase the rent tremendously, almost double it.”

Cao said when he purchased the building the rents were in the $500 to $600 per month range, and now the minimum rent is $900. Cao said a stipulation from the tax credit renovation required him to rent to individuals with an annual income of less than about $37,000. He said his core tenants have been mostly young professionals.

“I had to find a good niche. What I ended up doing was renting to individuals that just graduated,” Cao said. “These folks that were renting were professionals but they were just starting out and they didn’t make a lot of money.”

At the time of the sale, Cao said the building only had one vacant apartment.

Cao said his portfolio is comprised of 173 units totaling about $15 million in value. He said he’s going to look to reinvest his profits from the Exchange Alley sale soon.

“I have the money in the 1031 exchange, so I’m going to buy something shortly,” Cao said. “I’m looking in Richmond and within a two-hour radius.”

Just to the south is the LaDiff building at 117-125 S. 14th St. The furniture retailer’s building is under contract to be sold to an undisclosed buyer. However, that building, too, may be redeveloped into multifamily housing.

In the spring, a zoning letter was filed with the city, seeking to confirm that the LaDiff’s building’s zoning allows commercial and multifamily uses. The city approved the letter’s proposed uses.

At least two new-construction apartment projects are also being planned for the Shockoe area.

A 12-story apartment tower from Louis Salomonsky is being planned next to the former Weiman’s Bakery property at 127 N. 17th St., and over at 1801 E. Main St., a Northern Virginia developer is in the planning stages for a mixed-use building, the size and scope of which have not been finalized.

 

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Ashley Smith
Ashley Smith
9 days ago

Time to reform 1031s