City officials and the Waltham Alliance to Create Housing fear the sale of the Gardencrest apartments will result in some tenants being priced out.
It is one of the most sought-after multifamily assets in Massachusetts, but whoever lands the Gardencrest apartments in Waltham will have to pay a hefty price – and not just in terms of dollars.
In a situation bearing similarities to the controversial sale of the Northgate Heights apartments in Waltham three years ago, tenants of the 696-unit Gardencrest complex are mobilizing to battle anticipated rent hikes that some fear could result in massive displacement. With the sprawling development expected to fetch between $90 million and $100 million, Waltham city officials and a tenant’s rights group maintain that the new owners will have no option but to increase the rental rates.
That is the concern, Waltham City Council President Robert Logan acknowledged last week. I think there will be quite a few people who will not be able to afford to live there anymore.
Councilor Kenneth Doucette, who represents the district where Gardencrest is located, said it is particularly disconcerting given that there are many long-term tenants in the development who would not be able to find comparable quarters in the city. The DeVincent family, whose patriarch built Gardencrest decades ago, has kept rents below market in deference to their tenants, said Doucette. While stressing he sympathizes with the family’s desire to cash out on the property in one of the hottest multi-family investment markets ever seen locally, Doucette said the upheaval could be a disaster for constituents who live at the property.
It doesn’t look good, said Doucette. There just doesn’t seem to be much that the city can do.
Despite that outlook, Doucette and other city officials have not abandoned efforts to find a workable solution. At a meeting last week co-sponsored by the Waltham Alliance to Create Housing, council members met with an estimated 150 Gardencrest tenants to consider alternative strategies, including having WATCH buy the complex itself and keep rates affordable for low-income renters.
The tenants are excited about trying to do something, WATCH Executive Director Jennifer Van Campen said after the meeting. They are rolling up their sleeves.
Van Campen recently convened with two DeVincent family members and David L. Pergola of Meredith & Grew, whose firm is brokering the sale of the complex. Van Campen said her group suggested the difference between their $70 million offer and the price the complex is expected to fetch from traditional investors could be made up from a tax credit for selling to a nonprofit. The deal, she said, was dismissed without discussion or comment by the sellers.
Calls to principal Arthur DeVincent and Pergola were not returned by Banker & Tradesman’s press deadline.
Investor Worries
One issue emanating from the tenant activity is the prospect that some buyers will shy away from the property, or at least demand a significant discount. A principal with one nationally known multifamily investor agreed that the publicity ramifications could have a negative impact, so much so that the executive’s own company has opted to stay on the sidelines for the Gardencrest offering.
I don’t think we want to be the poster child for evicting [hundreds of] people, said the official, who requested anonymity. Another source expressed similar concerns, adding that the age of the asset and the cost of expected capital improvements that would be required to modernize the complex are also issues that must be addressed. Both sources said they doubt the sale will exceed $100 million, instead predicting it will trade for $92 million or $93 million.
At this point, it is unclear what the status of the sale is, with some observers maintaining that a buyer has been selected, but others questioning whether the property has been formally tied up. One potential suitor was said to be Ed Zuker of Chestnut Hill Realty, but sources said he is no longer in the running. Zuker did not return a phone call to discuss the matter.
In any event, Van Campen said WATCH remains committed to finding a solution, adding that the group is even more concerned over Gardencrest than it was with the sale of Northgate Heights in 1998 to SSR Realty Advisors. That particular deal became a public relations nightmare for SSR and its parent company, MetLife, when the new owners immediately invoked steep rental increases that outraged tenants and city officials. The Waltham City Council passed a resolution condemning the increases, while tenants even contacted several retirement boards associated with MetLife to protest the displacement of elderly tenants from the 207-unit complex. SSR sold the Northgate property last November for $27.9 million after initially paying $21.8 million.
Van Campen noted that Gardencrest is three times the size of Northgate. It accounts for 6 percent of Waltham’s rental housing stock, she said, and is filled with senior citizens, veterans and disabled tenants.
It’s going to be very difficult to find new places for many of these folks, said Van Campen. The tenants are now in the process of conducting an income survey, and will reconvene in two weeks to map out their next strategy, she said.
