Boston-based New Boston Fund has purchased the Windshire Terrace apartment complex in Middletown for $26.25 million. The property includes 226 units.

A real estate investment company that owns a key piece of the Hartford skyline has turned its sights toward residential investments. Boston-based New Boston Fund, which owns 100 Pearl St. in downtown Hartford, earlier this month bought a 226-unit apartment complex in Middletown for $26.25 million.

The purchase represents the company’s first residential investment in Connecticut, although it historically has developed and owned apartment buildings elsewhere. The Rappaport family, which started New Boston Fund in 1993, developed Charles River Park in Boston, a primarily residential mixed-use property.

“The Rappaport family has a longstanding history with multifamily housing,” said Dale Reese, New Boston Fund’s vice president and regional director for Connecticut. In the Middletown deal, New Boston Fund bought Windshire Terrace, a garden-style apartment complex, from Forest Glen Assoc., a private equity group based in Andover, Mass.

New Boston Fund expanded its multifamily property portfolio along the East Coast with the purchase of Dulaney Crescent Apartments, a 264-unit complex in Towson, Md., last October; and Washington Crossing Apartments, a 205-unit complex in Woburn, Mass., last November. The firm is also pursuing other residential development and acquisition ventures in Massachusetts, Connecticut and Florida, where several hundred units are under development.

“[New Boston Fund] has recognized the stability and the historic value appreciation of the apartment market,” said Mike Stone of CB Richard Ellis, who was the broker on the Connecticut deal.

The recent developments and purchases of apartment buildings are also part of a strategy to diversify New Boston Fund’s investments, noted Bill Fenn, the Boston firm’s vice president of asset management.

Reese added, in a prepared statement, “This purchase further expands New Boston’s Connecticut presence where we have an extensive portfolio of office assets totaling over 2 million square feet. It is our goal to seek out other assets of this quality as we build our residential portfolio.”

The purchase of Windshire Terrace meshes with New Boston Fund’s strategy of acquiring properties where property and management enhancement can reposition the asset in the market, according to Phillip K. Bakalchuk, the company’s senior vice president of acquisitions.

A ‘Strong’ Opportunity

The company is also happy with the price it paid. Windshire Terrace is in a neighborhood with many other apartments and condominiums. New Boston Fund paid $116,000 per unit, while many condominium units in the same area are selling for well over $150,000, Reese said.

New Boston Fund acquired the asset for a price that is well below the price being paid for older apartment properties in the submarket, according to Bakalchuk. The property’s rental rates are significantly below comparable properties and offer the opportunity to add value to the community.

The company is looking at all types of properties to expand its portfolio, but is interested in multifamily housing that is either Class A – as is Windshire Terrace – but could be improved with management changes or renovations, or Class C buildings that could be made into Class A or B buildings, Fenn said.

New Boston Fund’s executives hope that some management changes and renovations at Windshire Terrace will increase the occupancy and rents.

“It fits in well with our strategy, continues to build our New England presence and continues our expansion into the multifamily residential asset class,” said Bakalchuk in a prepared statement. “We view this as a strong, value-added opportunity that offers a relatively high risk-adjusted return for a 5-year-old stabilized asset.”

The property has the possibility of increased value with repositioning in the market and raising rents, Stone said.

The complex, which was built in 1999, includes 11 3-story apartment buildings, along with a clubhouse, pool, fitness center, laundry facilities and storage areas. Every unit at the property offers two bedrooms and a fireplace.

The complex is now 85 percent occupied, but New Boston Fund hopes that with management changes and renovations, it will be more than 95 percent occupied, Reese said.

The company is changing the management style to be more onsite, and is moving the leasing office from the back of the property to the front. New Boston Fund is also making more physical changes. It will renovate the swimming pool and the fitness center, and will upgrade all common areas. The company also will provide washers and dryers in each apartment – they were previously available to be rented – and is including cable in the rent.

New Boston Fund purchased the property before it hit the market, Fenn said.

New Boston Fund owns more than 2 million square feet of space in Connecticut. Its properties include 100 Pearl St., the 280,000-square-foot Class A office building in downtown Hartford; 500 Enterprise Drive, a 308,000-square-foot Class A office building in Rocky Hill; and 80 Lamberton Road, a 160,000-square-foot office building in Windsor that is currently being marketed for sale.