Miami-based Crescent Heights reportedly has agreed to buy Cambridge’s Museum Towers apartment complex from owner ING/Clarion. The Greater Boston area already has seen a series of multifamily sales take place in 2004.
A well-located apartment building in Cambridge’s Central Square is changing hands, with national heavyweight Equity Residential Properties agreeing to purchase Church Corner on Magazine Street. According to industry sources, the 10-story, 85-unit building will fetch about $22 million for the sellers, Church Corner II LP of Boston.
The transaction is the latest in a series of multifamily sales that have occurred in Greater Boston in 2004, following up on several busy years for apartment investment activity. Although multifamily fundamentals have slipped in the wake of the regional recession, buyers have continued to pursue such opportunities, with Massachusetts still considered among the country’s best areas for rental product.
“The market is very active,” acknowledged Jonathan Close, head of the Nordblom Co.’s Multifamily Investment Sales Team. According to Close, whose Burlington-based firm handled the Church Corner negotiations, 2004 promises to be nearly as solid as 2003, with Nordblom having already traded some 1,200 units in the area. Those sales account for about $130 million in value, while Close said his firm has a number of other deals in the pipeline that should wrap up by year’s end.
Citing client confidentiality issues, Close declined to discuss the Central Square sale, while Equity officials did not respond to inquiries by Banker & Tradesman’s press deadline. Nonetheless, sources insisted that the deal has been consummated, a notion supported by Equity Residential’s Web site, where the property has already been listed. The Web site also offers the availability of two- and three-bedroom units at Church Corner, with monthly rents ranging from $2,025 to $2,450. Amenities detailed include high-speed Internet, a fitness center, business center and garage, as well as impressive views of the surrounding area.
If the $22 million mark is correct, Church Corner would have sold for slightly under $260,000 per unit, making it one of the more expensive apartment investments made this year. “It’s the nicest building available in that area,” one source said in explaining the hefty price tag.
A Substantial Foray
If anyone can afford such an investment, it would seem to be Chicago-based Equity, which bills itself as the country’s leading owner of apartment properties, with some 1,000 assets in 33 states. The real estate investment trust has remained on a buying spree in 2004, acquiring 13 properties consisting of 3,540 units during the first half of the year with an aggregate purchase price of $448 million. According to company financial information, Equity now has nearly 205,000 residential units under its purview.
Equity has made a substantial foray into the Bay State in recent years, purchasing buildings at Charles River Park in Boston, Granada Highlands in Malden and the Rockingham Glen complex in West Roxbury. Just last year, the firm paid $35 million for the Gateway at Malden Center, a mixed-use property featuring 203 apartments in a pair of 12-story buildings.
For the most part, Equity focuses on retaining units for rentals, but a number of apartment properties throughout the region are being repositioned for sale to condominium converters. A long-standing apartment complex at the Charlestown Navy Yard was sold earlier this year to a group that has a condo strategy, while the same is true at the CambridgeSide Apartments in Cambridge’s Lechmere district. In that deal, Crescent Heights of Miami paid nearly $25 million for the 104-unit building and set about immediately marketing the property as condominiums.
In a similar plan that has dragged out for much of 2004, Crescent Heights supposedly has agreed to buy Cambridge’s Museum Towers apartment complex from owner ING/Clarion, with sources reporting that the firm wants to change at least one and probably both of the development’s towers into condominiums. The status of that deal is unclear, however, with calls to Crescent Heights officials in their Florida headquarters not returned, and officials at Cushman & Wakefield of Massachusetts also not available to provide an update. Cushman was retained by the owners to sell Museum Towers, with initial reports of a sales price in the $150 million range.
One challenge for apartment suitors has been finding investment-grade opportunities, with several large portfolios having already changed hands in recent years. Other owners who have tested the waters have pulled back after not receiving the price they deemed necessary, but Close expressed optimism that new assets will become available in the coming months, with the surge of capital leading owners to consider a sale. Along with the national players, Boston real estate investors have also been active in buying apartments, with the New Boston Fund having recently acquired a multi-building complex in Woburn from JPI of Texas.
Some buyers are not even waiting for existing apartments to come on the block, as witnessed by a series of commercial buildings that have been acquired in recent months with an eye toward conversion to residential. The activity has been taking place primarily in downtown Boston, while developers throughout the city have been pursuing new construction as well, such as a new luxury apartment project under way near Boston’s Fenway Park by Samuels & Assoc.
