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Raleigh apartments sold for $39 million

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A Philadelphia real estate company is taking advantage of a buyers' market to snap up a northwest Raleigh apartment complex.


Switzenbaum & Associates on Wednesday paid $39 million for the 374-unit Ashley Park at Brier Creek. The price was 5 percent more than what Chicago-based seller Equity Residential, one of the nation's biggest real estate investment trusts that focuses on apartments, paid in March 2005. 


It's the Triangle's biggest apartment sale of the year. At the same time, the deal shows just how much prices have cooled in recent years.


When Equity bought Ashley Park for $99,000 per unit, the deal represented the third-most expensive apartment transaction this region had seen. In ensuing years, as apartment investors flooded the region, prices soared. One Durham complex sold in late 2006 for more than $180,000 per unit.


In the past two years, as lenders have tightened loan standards, many investors have fallen out of play. During the year ending March 31, about $360 million have been spent on Triangle apartments, according to Real Capital Analytics, a New York research firm. That's down 71 percent from the same period a year earlier. 


Switzenbaum was able to close the deal after securing a $28.4 million loan from Midvale, Utah-based Capmark Bank, according to documents filed with the Wake County register of deeds.   


“This is the best time in the last 10 years to buy real estate,” Sam Switzenbaum, chief executive of Switzenbaum & Associates, said in a statement. “We can buy an Ashley Park today at substantially less than replacement cost, which is why we are looking at acquisitions, and not new construction, as the way to create sound investments to our portfolio.”


More than a year ago, Equity began selling what was among the biggest apartment portfolios in the region — 4,031 units in 15 communities across Durham, Orange and Wake counties — as part of a broader strategy to cash out of smaller markets and invest in bigger cities. 


The Ashley Park complex, at 10300 Pine Lakes Court, features one- to three-bedroom units and amenities such as a spa, swimming pool, tennis courts, a playground, club house, indoor basketball court, movie screening room, fitness and business centers. It was 98 percent occupied in March, up from 78 percent in March 2005. Average rents have fallen almost 10 percent to about $889 per unit during that period, according to Triangle Apartment Association data. 


The deal could indicate that patient money is ready to get back in the game, willing to bet on a region with good growth prospects. After months of stagnant activity, "a wave of private capital sources are reemerging or forming," said Jeff Glenn, an investment broker at CB Richard Ellis in Cary. "Pricing is down and return on investment is up."

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About the blogger

Business reporter Jack Hagel covers real estate for The News & Observer. Look for his Real Deals column about local deals and industry trends in the newspaper's business section on Thursdays. Jack can be reached at (919) 829-8917 or