2,580-Unit Multifamily Portfolio Trades for $460M

Mar 14, 2011

By Barbra Murray, Contributing Writer

In what local industry experts are touting as the largest multifamily real estate transaction in the United States since 2008, Pantzer Properties and Dune Real Estate Partners have acquired the 2,580-unit Magazine Portfolio in metropolitan Washington, D.C. for $460 million. The 50/50 joint venture snapped up the group of eight apartment communities, located in Northern Virginia and suburban Maryland, from RREEF, the real estate investment management business of Deutsche Bank’s Asset Management division.

RREEF had owned the Magazine Portfolio since 2006, when it purchased the properties from Morgan Stanley and partners, who had come into possession of the assets and 29 others with their $1.7 billion all-cash acquisition of former multifamily REIT Town & Country Trust. Six of the apartment communities are located in Virginia, including Barton’s Crossing in Alexandria; Carlyle Station in Manassas; Glen at Leesburg in Leesburg; Lionsgate and Village at McNair Farms in Herndon; and University Heights in Ashburn. The remaining properties, Fox Run and Watkins Station, are located in Germantown and Gaithersburg, Md., respectively.

Law firm Ballard Spahr L.L.P. represented the joint venture in the transaction, and commercial real estate services firm Jones Lang LaSalle, which marketed the Magazine Portfolio, stood in for the seller. The $460 million price tag included Pantzer Properties and Dune’s assumption of a $410 million debt, which the joint venture paid down to $390 million. More than a few investors were interested in the portfolio, but few were positioned to follow through with the terms. “The debt modification was a hurdle for some people,” Jason M. Pantzer, managing director with Pantzer Properties, tells MHN. Pantzer Properties made its portion of the purchase through its Panco Strategic Real Estate Fund I L.P.

It is no wonder that the Magazine Portfolio turned heads. “Metropolitan Washington, D.C. is one of the most vibrant apartment markets in the country,” Pantzer says. “All engines are running. It has tremendous infrastructure, high barriers to entry, and the ultimate tenant–the government. Also, the bloom is off the rose for home ownership; people are enjoying renting. We wouldn’t have done the deal if we didn’t have a lot of conviction in the market.” The Washington, D.C. apartment market closed 2010 with a vacancy rate of 5.4 percent, well below the national vacancy rate of 6.9 percent, and the figure is on track to drop to 4.1 percent in 2011, according to a report by Marcus & Millichap Real Estate Investment Services.

Pantzer Properties and Dune have rebranded the Class A and B+ apartment communities under The Point apartment homes flag, and Panco Management, Pantzer Properties’ management arm, is now managing the assets.

Source:  MHN online