At the time of purchase in 2012, Northwest Crossing Apartments was in foreclosure, suffered from deferred maintenance and was in dire need of capital. Most of the property was in its original 1968 condition and had sustained fire damage at one of its residential buildings just prior to foreclosure. Despite a strong submarket location, the property was only 72% occupied, which allowed our investment group to acquire Northwest Crossing Apartments at a significant valuation discount.
CREC formed a joint venture partnership with Morgan Properties to acquire the 588-unit Class B community located in the Baltimore suburb of Randallstown, Maryland for $49,300 per unit. The renovation budget for the property totaled $9.0MM ($15,243 per unit), plus an additional $2.0MM that was needed to rebuild the 22 units which were damaged by the fire.
Shortly after acquisition, new management and maintenance teams were hired to improve operations, and capital improvements were made throughout the property. The first round of the capital expenditure and repositioning included building rehabilitation, parking lot and concrete work, balcony repairs, landscape clean-up, awning replacement and reconstruction of 64 down units. The renovation work was completed by the end of 2013, and was $1.0MM less than budgeted.
During ownership, financial performance continually exceeded proforma projections. At the end of Q1, 2014, occupancy had increased to 93.0%. When combined with a 15.0% increase in rental rates, the result was a 40.0% increase in revenue since the time of acquisition. This increase, combined with a reduction in expenses, resulted in a 150% increase in Net Operating Income (NOI). As a result, a refinance occurred in the first quarter of 2014, allowing a full return of investor capital.
On June 26, 2019, CREC successfully closed on the sale of Northwest Crossing Apartments.
- Asset Location: Randallstown, Maryland
- 588-unit multifamily apartment community
- Investment Date: July 2012
- CREC Total Investment: $8.54 Million
- Investment Type: Multifamily acquisition
- JV Partner: Morgan Properties