Real estate investment firms Legacy Capital Partners and Fulton Peak Capital have acquired a property in Norfolk, Va. Completed in 1986 and situated at 390 S Military Highway, the Water’s Edge Apartments community comprises 190 units.
The new owners plan to undertake significant environmentally friendly upgrades to the multifamily property, including installing LED lighting and smart thermostats, as well as new showerheads and faucets. The apartments themselves feature vinyl plank flooring, granite countertops, washers and dryers, stainless steel appliances and new vanities.
“With the volatility in the capital markets, it’s been difficult to underwrite opportunities in general,” David St. Pierre, LCP co-founder and executive director, told Multi-Housing News. “An increase or decrease in interest rates could affect the returns of a deal dramatically, so determining the appropriate price to pay has been one of our greatest challenges lately, not just for Water’s Edge.”
The acquisition was agreed to quickly, noted St. Pierre. “When this deal came to market and held up, despite some extremely conservative underwriting, our partners at Fulton and we moved quickly to secure the opportunity. On Water’s Edge, we de-risked our exposure to the capital markets by index-locking the rate quickly after we had the deal under control.”
“We underwrote with a full budget, lower leverage and a higher rate assumption for a worst-case scenario return profile, which still met our investment hurdles,” said St. Pierre. “Since this deal was secured in the fourth quarter, when the 10-year was over 4 percent, all of the underwritten assumptions improved by the time we closed.”
A major economic engine of the Norfolk area is the nation’s largest Navy base, Naval Station Norfolk. Water’s Edge is also situated near one of the hospitals in the Sentara Leigh Hospital System. Several months ago, PRG completed the $45.5 million sale of a garden-style community in Norfolk.
