The 696-unit Gardencrest Apartments in Waltham has been on the sales block since early in 2001.

It was supposed to be a plum target for investors, but so far, attempts to sell the sprawling Gardencrest Apartments in Waltham have fallen well short of their mark.

Several months after the 696-unit complex was put on the block for sale, there are still no takers, and some observers maintain that the property has lost a significant amount of the luster it had when the marketing effort began last year. Although some established players, including Lincoln Property Co., continue to express interest in the development, others maintain that a combination of the slumping economy and concerns about capital and social issues at Gardencrest have made the sales price difficult to swallow.

“It’s very aggressively priced,” said one investor familiar with the property, claiming that the owners have set a price tag of more than $90 million on the complex. “Right now is not a very good time to be out at the top of the market, not when rents are flattening or even falling off.”

While he declined comment on the Gardencrest property, investment specialist Gary J. Lemire agreed that conditions have changed quickly in the multifamily sector. Although there is money available to buy such facilities, Lemire said investors are nonetheless wary of paying too much for any asset. As it is with other commercial real estate types, including office buildings and hotels, the bid/ask gap between apartment owners and investors only seems to be widening as 2002 moves into full swing.

“There’s plenty of capital, but it’s not going to be stupid capital,” Lemire said. “It’s not going to overpay.”

Property owners, meanwhile, are unwilling to trade at a discount in the depressed environment, Lemire said, meaning there are very few apartment properties available at present, especially investment-grade assets. Only smallish properties, featuring 50 or fewer units, seem to be coming out to the market in the early going of 2002, with most of those offerings considered below investment quality.

Nothing in Writing

One question emanating from the Gardencrest situation is whether there have been any agreements made at all that have since fallen apart. Most observers agree that Chestnut Hill Realty made an unsuccessful run at the complex last year, while there have been persistent reports that Lincoln and GMAC had the property tied up at one point before recently pulling out.

Not so, according to Lincoln principal John Noone. While acknowledging he has heard similar reports, Noone insisted that his firm has never reached any level of commitment with the project’s hometown owners, the DeVincent family. At the same time, Noone stressed that Lincoln considers itself a suitor for the property, dismissing the notion that Gardencrest should be attracting less investor ardor.

“Where can anyone build 700 [rental] units within Route 128?” he noted. “Waltham is in the heart of the high-tech market and it always has been … a great location.”

Noone said he is also not put off by the hefty asking price, explaining, “Assets that big are trophy properties and sometimes you have to pay more to get those.”

Noone said there do appear to be fewer investors chasing Gardencrest than there were at the outset of the marketing program, but he insisted there is still a solid level of competition vying for the development.

“We’ve expressed interest in that property in the past, and we are still interested, but our understanding is there are still a number of people looking at the property and that no decision has been made,” said Noone, adding. “I wish we did have it under agreement.”

Efforts to contact Meredith & Grew Executive Vice President David Pergola Sr., broker for the property, were unsuccessful by press deadline. Despite that, Meredith & Grew did state in its year-end investment outlook that Gardencrest “is scheduled to close at the asking price in the first quarter of 2002.” The report did not list a buyer or an asking price.

One additional complexity surrounding Gardencrest is a grassroots community campaign whose leaders are concerned about the long-term implications of selling the property. Having been built several decades ago by the philanthropic DeVincent family, Gardencrest has been known locally for providing a lower-cost alternative to the market-rate apartments that dominate the community. Because of that, Waltham city officials and residents are fearful that a sale would displace low-income tenants as the new owners seek to push the rents closer to market levels.

City and state officials were on hand at a rally two weeks ago protesting the sale, while Waltham City Councilor Kenneth Doucette and other officials met last week with the DeVincents and Pergola to see whether any consideration could be made for the most vulnerable of tenants. Doucette came away encouraged by the session, he said, suggesting one solution would be to establish a foundation that would subsidize the rents of those in need.

“It’s tough when you don’t have anything in writing, but my gut feeling is that they are willing to work with us,” said Doucette, whose district includes Gardencrest.

As for prospective buyers, Doucette said he was told the DeVincents are trying to shy away from investors most likely to drive rents up significantly. Other than that, Doucette said there was no indication of where the process is now, or when it might be resolved.

“There’s no question they are still trying to sell it, but they didn’t give me any timetable,” he said. “It sounds like they were close [to securing a buyer] late last year or early this year, but I’m not sure where they are right now.”