About the only thing hotter than the weather in recent weeks has been the Henrico apartment market.
At least five apartment complexes in the county changed hands last month, in deals totaling nearly $90 million and encompassing more than 860 units.
Among them, a California real estate company closed on a West End apartment complex for its first steps into the Virginia market.
A joint venture between L5 Investments and BH Equities closed on the purchase of the 232-unit Aspen Station Apartments at 1500 Forest Run Drive, off East Parham Road. The 17-acre property sold for $22.9 million.
L5 Investments is a California-based multifamily investment firm. BH Equities is based in Iowa and will manage Aspen Station through its property management arm, BH Management Services.
While the purchase continues a streak of Richmond deals for BH Equities, Mike Flaherty, founder and managing partner of L5 Investments, said Aspen Station is the first investment L5 has made in Virginia.
“I think we bought it right,” Flaherty said of Aspen Station. “We primarily focus on markets nationwide that we think are stable, number one, and emerging, number two.”
Aspen Station had been listed since August by broker Wink Ewing of ARA Newmark. Ewing said Aspen Station caught the eye of multiple suitors before selling to L5 and BH’s group.
“We’ve been selling them deals for several years now,” Ewing said of BH.
Ewing said the seller of Aspen Station was a joint venture between Bell Partners in North Carolina and Covenant Capital in Tennessee. The partners bought the complex in 2008 for $18.69 million, according to county records.
In addition to Aspen Station, BH Equities owns five other Richmond-area apartment properties. It went on a$116 million spree in 2012 to buy Bramblewood Estates Apartments, Broadmoor Apartments, Birchwood at Boulders and Tuckahoe Creek Apartments.
Ewing also represented the seller in BH Equities’ purchase of Southside apartment complex Newport Manorlast December.
Aspen Station’s new owners plan a $2.6 million renovation on the property. Plans call for remodeling its business center and gym, upgrading apartment units and athletic courts, and adding a new sport court and dog park. Flaherty said upgrades on units would coincide with $30 and $60 rent increases that will be phased in over two years. The average rent at Aspen Station is $974.
“This was a dated apartment complex,” Flaherty said. “Our goal is to eliminate obsolescence.”
Laura Cathlina with Berkadia Commercial Mortgage provided the debt for the deal.
Flaherty said Aspen Station may not be in a prime location, but its proximity to Reynolds Community College and the Hungarybrook Shopping Center means there is demand for apartments in the area.
“It doesn’t demand the attraction that Short Pump has, but it’s well located,” Flaherty said of Aspen Station.
He said L5 hopes to eventually add to its Richmond holdings.
“We certainly don’t want to be left with one good property there,” he said. “We’re aggressively looking to increase the portfolio there.”
L5 hasn’t been alone in sizing up the Richmond apartment market. Other sales last month included Hickory Creek at 2344 Hickory Creek Drive for $28.55 million; Millspring Commons at 9318 Tarheel Terrace off Staples Mill Road on June 28 for $17 million; Audubon Village at 4901 Wood Thrush Circle near White Oak Village on June 30 for $13.6 million; and Jackson Square Apartments at 865 Wales Drive on June 30 for $3.59 million.
Millspring Commons previously was owned by Fairfield Laurel Springs LLC, which lists its principal address as an office tied to California-based property management company Fairfield Residential. Fairfield Laurel Springs LLC bought the property in 2014 for $14.52 million, according to Henrico property records.
The recent buyer of Millspring Commons is Millspring Commons LLC, an entity controlled by Florida-based Electra America, according to Joe Rubin of Electra.
Rubin said Electra bought Millspring as part of a 12-property portfolio from Brookfield. In addition to the Richmond space, the portfolio included seven Charlotte, N.C. properties and four Raleigh, N.C. properties.
Audubon Village was previously owned by Audubon Village LP, which bought the property in 1999 for $800,000, according to Henrico property records. The Virginia Housing Development Authority issued bonds in April for several projects across the state, including a rehab of Audubon Village. Its new owner is LRC Audubon Village I LP, an entity tied to Alabama-based Ledic Realty Company.
Jackson Square Apartments previously was owned by Richmond Dutch Points LLC, an entity tied to Stabilis Capital Management in New York, which bought the property in 2014 for $2 million. Jackson Square’s new owner is Kai Kua’ana Makaha LLC, which is tied to a residential home in Hawaii.
L5 Real Estate Investments, LLC is a privately held investment firm focused on stable, income producing multi-family opportunities in emerging U.S. markets.