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Carr Properties Sells New Bethesda Apartment Towers For $220M

Three years after delivering one of the largest developments in Bethesda's history, Carr Properties is cashing out of the residential component.

The Wilson and The Elm, the high-rise office and apartment towers that Carr Properties developed in Bethesda.

The developer sold The Elm — a pair of high-rise apartment buildings totaling 456 units — to AIR Communities for $220M, according to documents posted this week to Maryland deed records.

Denver-based AIR Communities obtained a $155M loan that matures in September 2028 from Walker & Dunlop to finance the acquisition, deed records show. Berkadia's Brian Crivella, Walter Coker and Bill Gribbin brokered the sale on behalf of Carr, according to a press release.

The sale comes despite a major slowdown in real estate transaction market, as rising interest rates, a lack of available debt and a gap between buyer and seller expectations have made it difficult to get deals done. These issues have been more pronounced in the struggling office sector, but the region's apartment market hasn't been immune: The D.C. area's multifamily investment sales volume through the first half of this year was down roughly 39% from 2022, according to Delta Associates

Crivella said in a statement his team was "very pleased with how the buyer performed in such a turbulent market to execute on what will be one of the larger transactions in the DC MSA."

The $220M sale price, which pencils out to $482K per unit, is below the property's latest assessed value of $299M, according to property records. 

Carr Properties didn't respond to requests for comment on the deal. Walker & Dunlop declined to comment. 

A spokesperson for AIR Communities, a publicly traded REIT, declined to comment but said the company would provide more information on its next earnings call.

AIR, which was spun off from developer Aimco in 2020, owns 73 apartment communities totaling over 25,000 units across the country, including 11 properties in the D.C. area, according to its second-quarter earnings statement

The Elm features two 28-story apartment towers connected by a glass sky bridge. It is part of a larger development that also includes The Wilson, a 23-story trophy office tower, plus 10,700 SF of retail.

The Elm features 456 apartments with amenities including a rooftop pool and a fitness center.

The development, sitting at the intersection of Wisconsin Avenue and Elm Street, replaced the Apex Building, an office building with a Regal Cinemas. Carr acquired the property in November 2015 for $105.5M along with its equity partner, Alony Hetz Properties, and it received Montgomery County approval in January 2017 to build the 940K SF development. 

The project broke ground in August 2018, with then-Gov. Larry Hogan joining to mark the occasion. Construction proceeded during the pandemic, and The Elm welcomed its first residents in December 2020.

The amenities at The Elm include a rooftop swimming pool, a fitness center, a 17th-floor terrace and a dog park and pet spa. The units range from one to three bedrooms and feature private balconies, in-unit washers and dryers and walk-in closets. 

Rent prices at The Elm today range from $2,084 per month for the smallest units to $7,484 for the largest, according to the building's website.

The development's 363K SF office building reached 100% occupancy in November 2020 when Walker & Dunlop signed a 59K SF lease to relocate its headquarters from an older Bethesda building. The remainder of the office space, which was marketed by Transwestern, landed tenants including WTTG Fox 5, Enviva Partners, UBS Group, ProShares and WeWork

The project's retail space in March 2020 landed Tatte Bakery & Café, a Boston-based chain that has expanded rapidly in the D.C. area. The development was designed by Shalom Baranes Associates, and Clark Construction served as the general contractor. 

The buildings sit above a new station for the Purple Line, a light rail project with a 16-mile route through the Maryland suburbs that has been delayed for years. The latest estimate for the Purple Line's opening is May 2027, more than five years after its initial plan.