ARLINGTON, VA. — Mack-Cali Realty Corp. (NYSE: CLI) has acquired the 828-unit Crystal House, a multifamily property in the Crystal City section of Arlington, for approximately $262.5 million in a joint venture deal. The transaction marks Mack-Cali’s entrance into the metro Washington, D.C. apartment market. The real estate investment trust’s joint venture partner is a fund advised by UBS Global Asset Management.
The acquisition includes land to accommodate the development of approximately 295 additional units. The venture has obtained a $165 million mortgage loan from Walker & Dunlop LLC through the delegated underwriting and servicing (DUS) program of Fannie Mae.
The luxury multifamily property currently consists of two, 12-story towers with garage and surface parking. The apartment complex includes a mix of studio apartments and one-, two-, and three-bedroom units.
The vacancy rate in the Pentagon City/Crystal City submarket stood at 3 percent in the fourth quarter of 2012, according to data research firm Reis. The average effective rent was $2,195 per month, up 4.7 percent from the fourth quarter of 2011.
The property, which is 95.7 percent leased, was acquired from Washington, D.C.-based AvalonBay Communities. Earlier this month, AvalonBay also sold Avalon at Decoverly, a 564-unit apartment community located in Rockville, Md., for $135 million. That brings AvalonBay’s dispositions in the Washington, D.C. area to $332 million for the month.
The amenities at Crystal House include a rooftop fitness center and sky deck, Olympic-sized swimming pool, concierge service, as well as on-site retail. The property is located one block from the Metro (the local subway system), and is a short drive from Reagan National Airport. Crystal House is also close to the high-end retail shops at Pentagon City.
Mack-Cali’s Roseland subsidiary will manage the property and will oversee the renovation of the unrented units to “designer” standards in order to reposition the asset.
“The Mack-Cali/Roseland team is thrilled to be entering the Metro D.C. market, one that offers enormous potential,” says Mitchell Hersh, president and CEO of Edison, N.J.-based Mack-Cali. “When we’ve completed the renovation project, we are confident that we’ll be able to command rents at the highest end of the market.”
A publicly traded real estate investment trust, Mack-Cali owns or has interests in 279 properties, consisting of 271 office and office/flex properties totaling approximately 31.6 million square feet and eight multifamily rental properties containing more than 2,900 residential units, all located in the Northeast.
Mack-Cali’s stock price closed at $28.52 per share on Thursday, March 21, down from $28.71 a year ago.
— Matt Valley