AvalonBay Sells Huge D.C. Portfolio For $447M
Foulger Pratt has struck a nearly half-billion-dollar deal to buy four D.C. apartment buildings from Arlington-based multifamily giant AvalonBay Communities.
The Potomac, Maryland-based development firm has already closed the acquisition of three apartment buildings, two in NoMa and one in Gallery Place, totaling 1,110 units, Bisnow has learned. A fourth is under contract and is expected to close in the coming weeks, according to an announcement from Foulger Pratt.
AvalonBay sold the 203-unit Avalon at Gallery Place for $86M, according to a deed posted in D.C. records. The property at 770 Fifth St. NW was built in 2003 and has been renamed The Esquire on Fifth. Foulger Pratt took out a $59.4M mortgage from Capital One to buy that property.
Foulger Pratt also acquired two adjoining buildings on M Street Northeast in NoMa: the 469-unit Avalon First and M, built in 2012, and the 438-unit AVA NoMa, which AvalonBay built in 2018.
Avalon First and M sold for $182M and AVA NoMa for $142M, according to a document Foulger Pratt Chief Financial Officer Joe Clauser provided to Bisnow. Those deeds have yet to appear in property records, but the buildings already have new websites and new names. The Avalon has been rebranded as Mira First & M, while the AVA has been renamed Slate at NoMa.
“This portfolio acquisition fits within our strategy of acquiring high quality multifamily assets in great locations at significant discounts to replacement cost,” Clauser said in a news release. “We have long believed in the strength and resilience of the Washington, DC market, and with new supply tapering off, we see significant opportunities for rent growth and long-term value creation.”
The fourth property in the deal is the 138-unit AVA H Street building, which Foulger Pratt is buying for $36M. The firm partnered with PCCP and Tryline Capital on the 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,” PCCP Vice President Lia Barsanti said in a statement.
In total, Foulger Pratt agreed to pay $447M, or $358K per unit, at a 5.94% in-place cap rate for the 1,248-unit portfolio. Some of the buildings have ground-floor retail. The AVA has a 7K SF Streets Market with an Andy's Pizza on the inside, while Mira First & M has a Starbucks.
AvalonBay didn't immediately respond to a request for comment. On the REIT's July 31 earnings call, Chief Investment Officer Matthew Birenbaum said it had four D.C. asset dispositions pending, as well as others in Seattle and New York.
He said the D.C. transactions had been in the works since 2024 and proved to be “particularly challenging and hard to predict” due to D.C.’s Tenant Opportunity to Purchase Act.
The law gives tenants the right to organize and match any offer to purchase their building or select a preferred buyer.
Clauser said for the three properties that have closed, the tenants didn't form tenant associations. They did, however, for the H Street property and agreed to assign their TOPA rights to Foulger Pratt and its partners.
The three acquired properties were 95% leased, and Foulger Pratt plans to undertake a comprehensive value-add program, including targeted renovations, it said in the release.
The acquisitions bring Foulger Pratt’s D.C. portfolio to 2,904 units in D.C. and 7,755 units across the country. After the dispositions, AvalonBay will have 1,516 apartment units left in D.C. proper, according to its second-quarter financial report.
