Potomac, Maryland-based real estate development and investment firm Foulger Pratt has joined forces with Los Angeles-based commercial real estate debt and equity firm PCCP LLC and New York City-based real estate investment firm Tryline Capital to buy three properties, totaling 1,110 units, from AvalonBay Communities.
The transaction is the first phase of a four-property portfolio acquisition. Foulger Pratt and its partners will close on an additional 138 units from the Arlington, Virginia-based REIT in the coming weeks, according to a news release.
“This portfolio acquisition fits within our strategy of acquiring high-quality multifamily assets in great locations at significant discounts to replacement cost,” said Joe Clauser, Foulger Pratt’s chief financial officer. “We have long believed in the strength and resilience of the Washington, D.C., market, and with new supply tapering off, we see significant opportunities for rent growth and long-term value creation.”
The three initial properties in the transaction were built between 2003 and 2018 and are 95% leased. Foulger Pratt plans to make targeted renovations and active asset management strategies to enhance both resident experience and long-term value.
The initial three properties include:
- Avalon Gallery Place: A 203-unit urban-infill multifamily community built in 2003 in Washington, D.C.’s Gallery Place/Chinatown submarket.
- Avalon First and M: A 469-unit property built in 2012 and located in the heart of the District’s NoMa submarket.
- AVA NoMa: A 438-unit property completed in 2018 and adjacent to Avalon First and M in the NoMa submarket.
After the deals close, Foulger Pratt will own 2,904 units in the District of Columbia and 7,755 apartments nationwide. For AVB, the sales are another step in its long-term move to sell properties in its established coastal regions and reinvest in the Sun Belt.
On the REIT’s recent second-quarter earnings call, chief investment officer Matthew H. Birenbaum said selling properties in D.C. is “particularly challenging and hard to predict” due to the city’s Tenant Opportunity to Purchase Act, which gives residents the right of first refusal when their building is being sold.
“While these transactions have been in the works for an extended period of time dating back to 2024, the unusual level of uncertainty of the process led to these assets being included in our same-store bucket at the beginning of the year,” Birenbaum said.
The Trump administration's federal and contracting job cuts are also adding a level of uncertainty in the Washington, D.C., market for apartment owners.
AVB has seen softening in demand and pricing momentum over the last 60 days, most notably in Maryland and the District of Columbia. Northern Virginia has produced a mid-4% rent increase during the second quarter, holding up well so far, despite federal cuts.
“Given the level of uncertainty in the region, we’ve responded with a more conservative approach to pricing, which is impacting our outlook on rates for the second half of the year,” AVB Chief Operating Officer Sean Breslin said on the Q2 call.
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