TOPA changes DC sales
Multifamily buildings in DC often change hands before a single apartment is leased, yet buyers get similar cap rates as if they’d waited for the building to stabilize. Member Patrick Kerr of IRR explained during a presentation on recent activity in the market that the District’s Tenant Opportunity to Purchase Act gives renters the right of first refusal when their building is sold; selling the building to an institutional investor before leases are signed preempts any legal wrangling. Two recent sales that illustrate this point are the Berkshire 15, at 2005 15th St NW, a 96-unit building that sold in September for $53 million at a 4.6 percent cap rate. The building was 0% occupied at the time. The other notable transaction recently was the sale of Anthology, at 625 H St NE (across the street from the imminent Whole Foods), which sold for $160 million to an affiliate of institutional investor Bentall Kennedy, at a 4.75 % capitalization rate. It was also 0% leased at the time.