More than half of a 160-unit apartment building in Silver Spring is being converted to affordable housing after the developer that built it a decade ago sold it to pay off a matured loan.
:no_upscale():quality(75))
A partnership of nonprofit Affordable Homes & Communities and BrookWynn Capital acquired the building at 8711 Georgia Ave. for $42.3M, it announced Tuesday.
Branded as The Premier, the building was developed by Guardian Realty in 2014 as market-rate apartments with 20 units set aside through Montgomery County's Moderately Priced Dwelling Unit program. Now, the buyers plan to set aside another 80 units for households earnings up to 60% of the area median income and 20 units for up to 80% AMI. Forty units will remain as market-rate apartments.
The building is 98% occupied, and the buyers say no residents will be displaced as part of the conversion to affordable. Existing residents who qualify as lower-income will see reductions in their rent, and the other market-rate units will be converted to affordable when they turn over to new tenants.
The partnership also plans to invest $553K in improvements to the building.
To finance the deal and the affordable conversion, the partnership obtained a Fannie Mae loan arranged by CBRE and raised equity from JPMorgan Chase via the National Equity Fund. It also secured a payment-in-lieu-of-taxes deal from Montgomery County.
“Deals like this are rare,” AHC President and CEO Paul Bernard said in a release. “We’re actually increasing affordable housing, not just fighting to keep what exists.”
Arlington, Virginia-based AHC was founded in 1975 and owns 55 properties across Maryland, Virginia and Washington, D.C. BrookWynn, a Black-owned multifamily investment firm, was founded in 2023 and is based in New York, according to its LinkedIn page.
The 14-story building has a Wells Fargo branch in its ground-floor retail space. It sits on one of Downtown Silver Spring's main commercial corridors, about a quarter-mile from the Red Line Metro station and near the future Purple Line station.
Guardian Realty had obtained a $33.3M CMBS loan in 2015 after developing the building. It failed to pay off the loan when it matured July 1, after which the debt was transferred to special servicing, according to Morningstar Credit.
Investors have shied away from Montgomery County this year due to its new rent control policy that applies to buildings for their first 23 years after construction, several developers said at a Bisnow event last week. Permits for new multifamily construction have plummeted in the county, with just 54 being issued in the first eight months of this year.
Downtown Silver Spring has faced issues of its own since the onset of the pandemic, with rising office and retail vacancy and a lack of foot traffic, Bisnow reported last year.
