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Exclusive: Rivermont Crossing in Richmond Trades in Virginia's Highest Traditional Apartment Sale Outside Suburban Washington

Housing Demand Moves South as Investors Follow Seeking Higher Returns
October 4, 2018
The Rivermont Crossing in Richmond, Virginia, sold for a record price, reflecting demand south of the suburbs of Washington, D.C.

A suburban Richmond, Virginia, apartment complex sold for a record price in a sign of the spread of housing demand south beyond the suburbs of Washington, D.C., as investors follow into the region seeking higher rates of return.

The 457-unit Rivermont Crossing complex at 1530 River Tree Dr. in Chester, Virginia, traded hands for $79.75 million, the highest price for a traditional apartment property outside the Washington metropolitan area of the state. Bethesda, Maryland-based Stephen A. Goldberg Co. bought the property, which was developed in two phases during 2008 and 2009.

Richmond has emerged as a smaller market that offers apartment investors an alternative to nearby Washington, D.C., where prices are high and returns are low and getting lower. Projected rates of return in Richmond average 6.8 percent, according to CoStar research, a step up from the 5 percent and lower returns in the Washington submarkets.

About $500 million in apartments traded hands in the Richmond market last year, according to CoStar data, a record for the area. On average about $235 million in apartments have sold in the market annually since 2012. Already, CoStar has tracked $250 million in apartment trades this year, with the historically busy sales season of the fourth quarter still to come.

Vacancy in the market is 5.6 percent, just over the national average of 5.5 percent. A surge in construction during the past few years may be inflating that number and job growth is keeping demand high.

The Chesterfield County submarket, where Chester is located, is home to four of Richmond’s largest regional hospitals, for instance.

In the Rivermont Crossing sale, the price translates into a 5.4 percent projected rate of return, and a per unit price of about $175,000.

Though large rental properties close to Washington routinely fetch more than $100 million, only a handful in the outlying areas of Virginia have ever sold for north of $75 million.

In early 2017, the Pavilion at North Grounds, in Charlottesville, sold for $88.5 million, according to CoStar data, the highest price paid for a Virginia rental outside the greater Washington area. The complex serves the University of Virginia as a student housing community, a niche type of property that tends to trade higher than traditional apartments.

The Rivermont was sold with two assumable loans, one from Fannie Mae and one from Freddie Mac. The combined balance on the two loans is $57 million.

The property is a mix of traditional garden-style apartments and townhomes. The units are between one- and three-bedrooms, and have hardwood floors, washers, dryers, and stainless steel appliances. Amenities include a swimming pool, playground, a dog run and a fitness center.

Drew White, Mike Marshall and Wink Ewing of Newmark's ARA arm brokered the deal for the seller, Boyd Homes, of Virginia Beach, Virginia.

For more information on the transaction, please see CoStar Comp #4526488.

John Doherty, Multifamily Reporter  CoStar Group   
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