D.C.'s Crystal City Submarket Sees $161M Refi for Two Multi-Family Properties

By Barbra Murray, Contributing Editor

The Bennington

Bainbridge Cos. and The Carlyle Group have secured two loans totaling $161.4 million for the refinancing of two apartment properties in the thriving Washington, D.C. area. The assets, The Bennington and Crystal Square, encompass an aggregate 726 residences.

Located in the Crystal City submarket of Arlington, Va., approximately five miles east of D.C., The Bennington is a 19-story tower containing 348 units within close proximity of two Metro stations. With the assistance of commercial real estate services firm Jones Lang LaSalle’s Capital Markets team, Bainbridge and Carlyle obtained a $68.3 million loan to replace existing debt on the property. And for Crystal Square, which consists of 378 units in a 17-story high-rise directly across from a Metro station in Crystal City, a $93.1 million loan was put in place.

JLL originated both loans through Freddie Mac’s Capital Markets Execution program, relying on the solid reputation of Bainbridge and Carlyle, as well as their successful property management of the assets, as a selling point. But that’s not all the partners had to offer. “Besides borrower sponsorship, which is paramount in the lending decision, location and asset quality drive how aggressive the lenders get,” Shawn McDonald, executive vice president in real estate investment banking with JLL, told Commercial Property Executive.

Location, location, location. The apartment market continues to prosper in Northern Virginia, where the average vacancy rate is on track to drop to the mid-3 percent range this year, according to a report by Marcus & Millichap Real Estate Investment Services Inc. As a whole, metropolitan Washington, D.C., is on a roll. “Strong tenant demand and rent growth will support another year of positive marketwide performance,” the report noted. “Renter demand will grow faster than apartment stock in 2012, as job creation and a large population of recent college graduates form new households.” Additionally, stringent residential mortgage requirements will still play a roll, leading would-be homebuyers to the luxury apartment market.

Across the country, lenders have been smiling down on the apartment sector. Of the 20 institutional lenders that participated in a recent JLL survey, 76 percent indicated that they view apartments as the best investment opportunity.

*This story was updated at 8:05 a.m. EST on March 19, 2012 to add additional information.