The 120-unit Willow Reed Apartments complex in East Haven was sold for $10.2 million earlier this month, helping the state’s apartment market to begin 2006 with a flourish.
Connecticut’s apartment market started out strong this year with a notable sale in East Haven, and increased stability in the market is on tap for 2006, according to one industry observer.
“I think ’06 is going to be a strong year,” said Victor Nolletti of Marcus & Millichap Investment Real Estate Services in New Haven. “I see a fairly stable market.”
Nolletti and his partner Steve Witten earlier this month completed the $10.2 million sale of a 120-unit East Haven apartment complex. The sale follows steady improvements in the apartment market over the last few years.
“In general, the apartment market has had a steady increase in volume over the past two or three years,” Nolletti said. Previously in Connecticut, he noted, there was a lot less velocity. But since then the state has been popular with investors because of its high barriers to entry and the availability of apartment complexes for prices well below replacement costs, according to Nolletti.
“I think Connecticut has been discovered as a very desirable investment alternative,” he said.
Trades and velocity in the market are both up.
“The apartment market continues to be very active,” Nolletti said.
Capitalization rates, or the percentage used to convert an estimation of next year’s net operating income into an estimation of value, are releasing somewhat, which will likely have a stabilizing effect on values, Nolletti noted. But interest rates should remain stable and the market should stay healthy for both buyers and sellers, he said.
‘A Value-Add Play’
The sale of the East Haven apartment complex, which is near the shoreline, closed on Jan. 6 at $85,000 per unit, or $99 per square foot. The complex, called Willow Reed Apartments, is located at 97-119 Hemingway Ave., near Interstate 95.
“[It’s a] very nice site, a very good location,” Nolletti said, adding that the complex is slightly below the market’s typical capitalization rate and rents were below market. “It’s definitely a value-add play,” he said.
The complex is on about five acres of land, about a quarter-mile from Long Island Sound, public beaches and town facilities. The site also holds a 2-story-plus basement garden and townhouse masonry and frame structures built around 1970. The 103,200-square-foot complex contains a total of 120 units.
The apartment units consist of 24 one-bedroom, one-bath flat-style units totaling 720 square feet apiece; 24 two-bedroom, one-bath flat-style units that each total 820 square feet; and 72 two-bedroom, one-and-a-half-bath townhouse-style units totaling 920 square feet apiece. The apartments have private front and rear entrances, cable television, laundry facilities, individually controlled heating and air-conditioning, plush wall-to-wall carpeting, hardwood floors, thermopane windows and mini-blinds, abundant parking and a playground area.
The seller was Trolley Crossing LLC, which was represented in the transaction by Coleman Levy and William Stokesbury of Levy & Droney in Farmington. The buyer was Taymil Brett LLC, which was represented by Frank Appicelli and Scott Miller of Bingham McCutchen LLP in Hartford.
Taymil Partners has targeted the Greater New Haven Area for expansion and has noted that Willow Reed offers a highly desirable unit mix with a predominance of two-bedroom townhouses, an attractive setting and proximity to the waterfront, and represents a value-added opportunity through both exterior and interior improvements.
Taymil last month bought another building in Greater New Haven. The firm bought the Armory Apartments at 511 Main St. in West Haven for $3.22 million That site, which includes a 2-story-plus walkout basement, is a masonry structure built circa 1900 that was formerly used as an armory by the state of Connecticut. The property was converted into residential apartments in 1987. The complex contains a total of 57 apartment units. Those consist of six one-bedroom, one-bath units that each measure 930 square feet; 28 one-bedroom units with studies that each total 996 square feet; 21 two-bedroom, one-bath units that total 1,180 square feet apiece; and two two-bedroom units with studies that each measure 1,172 square feet. Officials said the units all benefit from the aesthetics of a well-conceived conversion including exposed brick and high ceilings.
Earlier last year, the Massachusetts-based firm bought three widespread multifamily properties along Interstate 84 in Connecticut for $15.2 million. The properties are located in Bristol, Meriden and Manchester.
