More than 100 registrants have signed up to take a shot at acquiring Longwood Towers, a 268-unit apartment complex in Brookline.
It has seemingly everything: the Brookline address, a stop adjacent to the MBTA Green Line trolley and a commercial real estate market favorable for multifamily properties. And so far, it appears Longwood Towers in Brookline is garnering all the attention anticipated when it was placed on the sales block earlier this year.
“Everybody wants to see it,” said broker Edward C. Maher Jr. of Cushman & Wakefield in Boston, which is handling the sale of the 268-unit complex. “It’s a special piece of real estate.”
Even with a hefty asking price of $80 million, more than 100 registrants have signed up to take a shot at acquiring Longwood Towers, which joins a growing list of apartment developments in Massachusetts going on the sales block. Cushman & Wakefield is running constant tours of the property, said Maher, with bids due the first week in September.
Maher cited several reasons that Longwood Towers is receiving such investor ardor. Not only does Brookline have the market fundamentals near and dear to investors, with an above-average income and perception as a residential-friendly community, Maher said the location adjacent to the Longwood Medical Area offers a sense that it is “recession-proof.”
“It’s got a lot going for it,” said Maher, so much so that there have even been several preemptive offers by eager suitors. According to Maher, however, it is unlikely that Longwood Towers will be taken off the market early, with the investor interest so strong that the process is slated to proceed all the way through the bid process.
Even with the apartment market suffering through one of its worst stretches ever locally, with vacancies at some of the area’s best properties well into double digits, investor interest has hardly wavered, with Maher reporting that it remains by far the most sought-after property type. Most observers anticipate that the economic slowdown will impact multifamily the least, and the one-year rollover of its contracts with tenants typically means that such assets can recover more quickly on an upturn.
Whatever the reason, multifamily does appear to be the asset of choice at present, with a number of significant apartment properties changing hands during the first two-thirds of 2002. Most notably was last week’s sale of the Thomas J. Flatley portfolio (see story on Page 1), deemed by many to be the most significant multifamily deal ever transacted in New England.
‘A Real Trophy’
Meanwhile, other apartment sales also have continued throughout the Bay State this year. Another major deal was consummated last month when Home Properties of America acquired the 696-unit Gardencrest Apartments in Waltham from the DeVincent family. Brokered by Meredith & Grew, the $85 million deal was the leading sale of the year before being dwarfed by Flatley’s agreement with Denver-based Apartment Investment and Management Co.
“It’s the hottest asset class by far,” said Maher. “Nothing else even comes close.”
Except in select cases, most of the overseas capital pouring into the United States from Germany and the Netherlands does not appear to have embraced multifamily, with those sources apparently still focused on core office building properties in urban settings such as Boston’s Financial District. But domestic pension funds and advisors apparently see multifamily as the best risk in the current environment, with groups such as SSR Realty Advisors joining the real estate investment trusts in chasing apartment opportunities.
The Longwood Towers property certainly seems to be drawing investors from all quarters. Not only are multifamily deals generally in short supply, one observer noted that the Longwood is even rarer, explaining that “it isn’t very often you get 200-plus apartments coming on the market in Brookline.”
“That’s definitely one of the big reasons it is getting so much attention,” said the broker, who described the $80 million price tag as “high but achievable.”
“That property is a real trophy,” said the broker, concurring that the location near Longwood Medical Area will offer a measure of comfort to potential buyers. The dearth of multifamily assets up for sale throughout the region will also keep the competition heavy, added the broker, with the spate of recent sales completions quite possibly meaning an end to properties coming on the block for investors. Partly due to Boston’s older residential stock, investment-grade deals are particularly rare, with many of the sales that have occurred this year coming at older developments in need of restoration.
The Gardencrest deal would fit into that category, with Home Properties already unveiling plans to overhaul the units scattered about the property, located near the intersections of Routes 60 and 20 in Waltham. While the previous owners were credited with keeping rents affordable, they reportedly did so at the expense of the physical plant, mandating a dedicated renovation program by the new owners. Other buyers, such as SSR Realty Advisors, are already implementing restoration plans at properties such as Yorkshire Court in Shrewsbury.
