Breaking: Hamilton Co. Buys AvalonBay Lexington Apartments for $31.6M Via NAI/Hunneman

LEXINGTON—The British would be envious of the Hamilton Co.’s triumphant record here in the ongoing fight for metropolitan Boston apartment properties, with the Boston-based operation picking up its second project on Worthen Road—a thoroughfare in the heart of the famous Revolutionary War tilt that took place here in April 1775—and an asset named after native son and Minuteman leader Captain John Parker. The 94-unit Captain Parker Arms Apartments has been purchased for $31.6 million via an exchange with AvalonBay Communities in a deal negotiated by the Capital Markets Group at NAI/Hunneman Commercial Co.

“The interest level was exceptionally strong for this asset class due to its location in Lexington, which has a highly respected school system and very strong demographics with limited supply of units,” NAI/Hunneman principal David N. Ross tells therealreporter.com regarding a process that saw upwards of 40 tours and more than two dozen finalists vying for the 11-building complex that is set on 10.6 acres. The NAI/Hunneman crew was well-prepared for the onslaught, recounts Senior Vice President Lawrence Goldstein, with “the Queen of Organization” Gina Barroso and energetic multifamily team member Henry Lieber keeping the line moving during their rapid-fire campaign that ended with the Hamilton Co. flag planted at 125 Worthen Rd., barely a mile from its Battlegreen Apartments at 32-42 Worthen Rd., acquired by the firm in June 2011 for an even $10.0 million. “The property showed itself really well, and our group was able to (identify) further value and help people recognize the upside in this opportunity,” explains Goldstein of Captain Parker Arms. “Our team concept definitely helped maximize results for AvalonBay.”

NAI/Hunneman, for example, stressed the Live/Work/Play nature of the property that is located adjacent to the high school and home to vast recreational facilities including an indoor pool. Downtown dining and retail options are also within walking distance.

Virginia-based Avalon has been an active player in eastern Massachusetts for 20 years using a bifurcated strategy of new construction and renovating existing product similar to Captain Parker Arms, an investment secured one month after Hamilton bought Battlegreen, with the REIT spending $20.8 million for its Lexington entry, or $221,000 per unit versus the $336,170 Hamilton Co. shelled out. Hamilton, which also owns another Lexington apartment property, paid $208,000 per unit for Battlegreen, a 48-unit, six-building asset.

While the stakes are much higher in this instance, Ross expresses confidence Hamilton’s aggressive stance will ultimately pay off for the company whose leadership includes founder Harold Brown and President Carl A. Valeri. “AvalonBay did a great job taking it from a B-minus property to B-plus, and now Hamilton Co. will use its ‘secret sauce’ and figure out a way to decrease expenses and increase rents,” the veteran broker predicts.

Ross and Barroso are quite familiar with Captain Parker Arms, having orchestrated the prior sale to AvalonBay. While keeping specifics of the Captain Parker Arms talks quiet—even declining to verify the price—the exclusive listing agent indicates Hamilton Co. applied its deep market knowledge and independently gathered information in advance to keep ahead of the competition. “At the end of the day, they had better pricing and better terms,” he says. “They had done all the due diligence before and were ready to go when it mattered.” Says Goldstein: “Hamilton couldn’t have been more professional,” leading to a smooth closing on an all-cash transaction.

Units at Captain Parker Arms are being advertised at $1,800 per month for a one-bedroom, one-bath apartment on the lower end and begin at $2,800 for a three-bedroom, two bath constitution. There are also two-bedroom, one bath layouts (starting at $2,100 monthly) and those with two bedrooms and two baths beginning at $2,200 per month.

Interestingly, Valeri says Hamilton Co. was on the prowl for Captain Parker Arms Apartments at the same time it was chasing Battlegreen. “I always thought it was a great location, well-managed and a quality property,” he recounts, but instead turned its attention to the latter asset. Four years later, that admiration is even stronger in the wake of Avalonay’s upgrades, says Valeri. “They spent their money on it and moved the rents up quite a bit, and we are getting the benefit of that investment,” he observes, with unit interiors getting particular attention. Hamilton Co. sees further gains by modernizing the HVAC system, continuing a program of energy enhancements throughout the portfolio that now is in the range of 5,700 units focused on Greater Boston.

Some 600 of the firm’s apartments are clustered around Lexington in such desirable communities as Arlington and Winchester. Of those, 192 are in Lexington. Having been on a buying spree for several years after the 2008 recession, the heightened competition and rising prices has the firm “being careful” on the acquisition front, says Valeri, with a more active program in place to construct multifamily on several owned lots outside its Allston headquarters and build on other city and inner-suburb locations such as Somerville. But when Captain Parker Arms Apartments re-appeared on their radar screen, Hamilton Co. was ready to strike, says Valeri. “We felt this was the best place to put our money,” he relays.