Foulger Pratt, a Maryland-based development firm, has successfully closed a deal for four significant apartment buildings in Washington, D.C., from AvalonBay Communities, a well-known multifamily organization based in Arlington. The total price for the portfolio is reported to be $447 million, equating to approximately $358,000 per unit across the 1,248-unit acquisition.
The properties acquired by Foulger Pratt include three apartment buildings located in NoMa and Gallery Place, totaling 1,110 units. This marks a considerable investment in a competitive market known for its high demand and resilient real estate landscape.
A key part of the acquisition is Avalon at Gallery Place, a 203-unit building sold for $86 million and now renamed The Esquire on Fifth. This property, situated at 770 Fifth St. NW, was constructed in 2003. To finance this purchase, Foulger Pratt has taken out a mortgage worth $59.4 million from Capital One.
In NoMa, two adjoining buildings were also purchased: the 469-unit Avalon First and M, built in 2012, sold for $182 million; and the 438-unit AVA NoMa, which was completed in 2018, acquired for $142 million. Following these acquisitions, Avalon First and M has been rebranded as Mira First & M, while AVA NoMa is now known as Slate at NoMa.
Foulger Pratt’s Chief Financial Officer Joe Clauser commented on the strategic fit of this acquisition, stating, “This portfolio acquisition fits within our strategy of acquiring high-quality multifamily assets in great locations at significant discounts to replacement cost.” He expressed strong confidence in the Washington, D.C. market, citing reduced new supply as a factor that would contribute to potential rent growth and long-term value creation.
The fourth building in this transaction is the 138-unit AVA H Street, which Foulger Pratt is purchasing for $36 million. In this transaction, Foulger Pratt partnered with PCCP and Tryline Capital, collaborating on this substantial portfolio acquisition.
“We believe this transaction represents an opportunity to secure institutional-quality multifamily product in some of Washington, D.C.’s highest barrier to entry neighborhoods at a meaningful discount to recent trades,” said Lia Barsanti, Vice President of PCCP. This acquisition reflects a broader trend in the real estate market where institutional investors are seeking opportunities in prime locations that may be currently undervalued.
The overall financial terms indicate an in-place cap rate of 5.94%, and some of the acquired buildings even feature ground-floor retail space. Notably, the AVA building includes a 7,000 square-foot Streets Market with an Andy’s Pizza, while Mira First & M is home to a Starbucks.
AvalonBay has not yet responded to inquiries regarding the transaction. However, during a recent earnings call, Chief Investment Officer Matthew Birenbaum indicated that the company had several asset dispositions in D.C. underway, along with others in Seattle and New York. He described the D.C. transactions as particularly complex due to the city’s Tenant Opportunity to Purchase Act, which empowers tenants to match any purchase offers or select a preferred buyer.
For the three properties that have successfully closed, tenant associations did not materialize, easing the acquisition process. However, for the H Street property, a tenant association was formed, and its members agreed to assign their TOPA rights to Foulger Pratt and its partners. Foulger Pratt has announced that the three acquired properties are currently 95% leased and plans to implement a comprehensive value-add program, which involves targeted renovations to enhance the properties.
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