ING Clarion buys DC area apartment building for €90m

GLOBAL - ING Clarion Partners has paid $118.5m (€90.1m) to acquire the 300-unit The Millennium at Metropolitan Park in Arlington, Virginia.

The real estate manager had set up this acquisition as a forward commitment purchase; the commitment was issued to the project 24 months ago. The vendor was Virginia-based Kettler Development.

The arrangement allowed the manager to buy the property at 5% to 7% below replacement cost. Marc DeLuca, a director with Clarion said: "The project was built during a time of the financial crisis and many construction firms were desperate for work."

ING Clarion owns another complex in the same area: the 399-unit Gramercy at Metropolitan Park for which the real estate manager paid $200m in June 2007.

DeLuca said: "We have historically viewed the Northern Virginia/Washington D.C. corridor very positively.  The area continues to be resilient with above average-growth in population and median household income."

ING Clarion said the cap rate on this deal is well above the low 4% range. DeLuca said, "There was a comparable property that we used to price our asset and this was the low 4% range. The cap rate on our deal was much higher than that."

The Millennium property is now 96% leased. ING Clarion is expecting 4% to 8% rental growth over the next 12 months.

ING Clarion acquired the property for one of its investment funds; it considers the property as a core asset and will hold it for at least the next 10 years.