BOSTON—With this city’s 213-acre Longwood Medical Area hosting a legion of top physicians and researchers, investors worldwide have been stirred by the chance to house those professionals in its surrounding neighborhoods, and that desire is being credited for three springtime apartment trades brokered by Boston Realty Advisors that have yielded a collective $64.1 million despite the disruptive Covid-19 crisis.
Swedish-based Akelius Real Estate Management opened June making an all-cash purchase of 49 Worthington St. for $21.9 million from BRA client and veteran landlord John A. Coppola, while the independently owned advisory and brokerage firm followed that closing completing an $18.2 million swap of 40-44 Parker Hill Ave. and 198 Hillside St. representing seller Mount Vernon Co. in the exchange cemented almost six years after founder Bruce A. Percelay’s firm spent $11.6 million on the 44-unit package in the final days of 2014.
“Given the dynamic community of medical and academic institutions, both opportunities garnered tremendous interest,” BRA founder and CEO Jason S. Weissman relays in announcing the closings while adding that “these assets have multiple attributes buyers are looking for—location, proximity to public transportation and convenience to neighborhood amenities.”
Besides the pair of just-completed assignments, BRA was agent orchestrating the $24 million legacy sale of 16-20 Westland Ave. for 49 Worthington St. steward Coppola, who retained BRA to jointly peddle both assets which ultimately were selected by different buyers. The Westland Avenue property is a 55-unit mid-rise that yielded $24 million from Dallas-based Multifamily Management Real Estate during the last week of March, a deal fueled by $13.2 million from Hunt Real Estate Capital and detailed in the latest Real Reporter.
Combined with January’s $28.4 million trade of the elegant 77-81 Park Dr. to Davis Cos., the book of business brokered within walking distance of the LMA puts BRA above $92 million YTD on a team that includes partner Nicholas M. Herz plus Associate Directors Kevin R. Benzinger and Andrew B. Herald. The contingent accomplished their efforts the past three months under the stay-at-home portion of the state’s shutdown period when CRE had become fully exposed to the Coronavirus’ far-reaching impacts.
Held under the entity Two Chandler Trust at the time of its sale, 49 Worthington St. was secured for $590,000 by Coppola with a $400,000 loan from Bank of New England 37 years ago last week. That is under $11,000 per unit versus $405,555 per unit required nearly 40 years later. As the prior article calculated, 16-20 Westland Ave. went for $436,375 per unit compared to the $37,725 per unit Coppola dispensed in August 1986.
While difficult to pin down, there has been anecdotal talk of multifamily buyers demanding double-digit discounts due to the Covid-19 uncertainty over demand and the direction rents might be headed in a metropolitan area where “up” has been the only way rates have trended over the past decade. Boston’s annual influx of college students—representing hundreds of thousands of renters—is among the aspects being weighed in lock step with academia considering how large those numbers could rebound by this autumn, with some schools indicating already that post-Thanskgiving could have no in-person instruction until February even if the fall semester begins on time.
On the flip side, the importance of having a home base has never been more critical, and Weissman notes what had been a limited inventory of apartments is less likely to change near term due to delays in construction. Investors have other reasons to be motivated, he adds, including record low interest rates and data showing tenants largely continue to pay rent, at least more than anticipaed. Volatility in the overall economy probably bodes well for CRE investments, Weissman further surmises, citing its tangible nature and a dearth of stability in the stock market today.
“People are looking for hard assets,” he says in also predicting institutional capital will likely take a hard look at Middle Markets opportunities because financing has become frozen for mega-deals. And the response to the string of LMA trades offers further solace, he relays in explaining even the two deals completed this week were priced after Covid-19 was in full throttle regionally but were not influenced by the pandemic. “I am extremely excited at how resilient the (multifamily) market has been,” Weissman recounts. “Conditions have held up remarkably well in terms of demand and continued capital rate compression and it proves there is ample liquidity for multifamily . . . which is a very good sign that we could rebound very quickly from this . . . We have an amazing pipeline of properties we feel will be very well-received by investors as the year goes on.”
Reached earlier today, Percelay agrees that the proceeds selling 40-44 Parker Hill Ave. and 198 Hillside St.—branded in its marketing as “The Rise”—reflected a “negligible” impact from the pandemic, and was in line with expectations in opting to offer it for sale pre-Covid. “It proved to be a good transaction that met all of our objectives,” he says, explaining the firm which holds substantial multifamily and commercial assets in metropolitan Boston had deemed The Rise “an outlier” to its portfolio which is focused on other neighborhoods including Allston where Mount Vernon Co. is based and in the Back Bay.
Percelay did not provide specifics on the deal metrics, but describes the assets harvested as being “in good condition” following improvments made prior to it listing. The mix of one- and two-bedroom apartments are complimented by coveted off-street parking for tenants.
Akelius, meanwhile, now owns a 26.125-sf building at 49 Worthington St. that features several studios on top of its own inventory of one- and two-bedroom formats in the brownstone that was constructed in 1920 squeezed onto a 7,300-sf land parcel. That and the Parker Hill Avenue and Hillside Street assets are all located off Huntington Avenue, a major boulevard connecting to the Back Bay.
Akelius has built a substantial apartment portfolio in the Hub after sweeping into the city five years ago with a flurry of acquisitions, including 252 units of brand-new construction in South Boston purchased from Lincoln Property Co. for $152.5 millon as initially announced by Real Reporter, and the separate acquisition of two dozen apartments at 339 D St., also in Southie, which fetched $16.4 million.
Hillside & Parkerhill LLC, the entity acquiring the Mount Vernon holdings, is managed by Jason B. Savage, that investor said to have been acquiring the properties as part of a 1031 tax deferred exchange, and also to complement other multifamily properties in the Mission Hill area. A mortgage of $15.2 million was provided by Needham Bank to facilitate Savage’s purchase of The Rise.