In what would be one of the largest multifamily sales ever in New England, a Colorado-based real estate investment trust is reportedly acquiring the massive residential portfolio of Braintree developer Thomas J. Flatley, Banker & Tradesman has learned.
According to industry sources, Apartment Investment and Management Co. of Denver has agreed to buy thousands of apartment units from Flatley, including properties in North Andover, Woburn, Framingham and Worcester. Other holdings are located in Rhode Island and New Hampshire.
Although details remain sketchy, some observers estimate the sale will easily exceed the $470 million Flatley reaped in 1997 from the sale of his extensive hotel portfolio. He has also previously disposed of some residential holdings as well, including Granada Highlands in Malden and Tyrone Village in Randolph in the late 1990s to Equity Residential Trust.
Calls to the Flatley Co. at its Braintree headquarters and to AIMCO in Denver were not returned by press deadline, but sources insisted that the sale was taking place. “I know it’s under agreement,” insisted one Boston real estate investment specialist, while another concurred.
“I’m sure of it,” seconded that source, who predicted the sale would be between $500 million and $700 million, depending on how many of the units Flatley is planning to trade.
Given the previous sale of more than 1,000 units to Equity, it is difficult to gauge how many units the privately held Flatley Co. controls, although the company’s founder estimated at one point that he had 6,000 units in the portfolio. Even if he were to hold onto a portion of those properties, the AIMCO sale would result in several thousand units changing hands.
“This will be as big as it gets,” one source said. “It’s huge no matter how you look at it.”
Nordblom Co. Vice President Jonathan Close, a specialist in multifamily sales, agreed that it would be an unprecedented transaction for Massachusetts. Flatley has been rumored on and off in recent years to be selling the apartment portfolio, said Close. If Flatley indeed has such intentions, Close said, now is the right environment, with investors rushing to purchase apartment complexes and paying a big premium to emerge victorious in the bidding.
“If he’s going to sell, this is the best time to do it,” said Close. “He’s going to receive top dollar right now.”
Changing Landscape
If the deal goes through, it would certainly change the landscape of the multifamily market in the Bay State. Among the many apartment communities owned by Flatley are Bayberry Hill Estates in Framingham, Vantage Pointe in Swampscott, Granada Georgetown in Framingham and Wexford Village in Worcester. The firm has also branded several of its developments Royal Crest Estates. Such offerings can be found in North Andover, Fall River, Marlboro, and Nashua, N.H.
Even with Boston’s economy causing difficulties for the multifamily market, most industry observers feel the region has fundamental strengths that bode well for long-term investment in apartment developments. Massachusetts has some of the oldest multifamily stock in the country, with little new construction having occurred for much of the 1970s and 1980s, in part due to the state’s flirtation with rent control during much of that period. Although that has changed recently with the advent of such companies as JPI Properties and AvalonBay Communities, most of the new apartments coming online are held by the developers themselves, often real investment trusts as in the case of AvalonBay.
The properties available for sale have been warmly received by investors, with pension-fund advisors among the entities that have been actively pursuing multifamily opportunities. The biggest problem, according to Close and others, is finding owners willing to sell.
Among the properties that have changed hands lately is Mill Village in Randolph, a 311-unit complex acquired last month by SSR Realty Advisers. Home Properties of America purchased the 696-unit Gardencrest Apartments in Waltham while the Mount Vernon Co. purchased Wood’s Edge in Attleboro for $8.3 million.
The sale of the Flatley portfolio would also represent the continued sell-off of Thomas J. Flatley’s impressive real estate portfolio. Over the years, he has developed a range of properties, including office buildings, industrial space and the Tara Hotels, constructed throughout Massachusetts.