The development of multifamily rental housing in growing suburban communities benefiting from proximity to high-paying employment opportunities, abundant retail and recreational amenities, and excellent highway access is another component of our residential investment strategy.
We saw an opportunity in one such suburban community, Burlington, MA. We owned a 7.5-acre development site that we acquired as part of larger four-parcel office park that we had successfully repositioned for sale.
We approached the Town of Burlington and learned that they would be interested in working with our team to utilize the development parcel for higher-density multifamily use under Massachusetts’ Chapter 40B housing production law, which requires that at least 20% of the units meet certain affordability requirements.
Execution
Through this so-called “Friendly 40B” process, we permitted, designed, and developed a five-story, 270-unit apartment building over a two-level parking garage and included amenities such as a clubroom, an outdoor pool, a fitness center, elevated interior courtyards, and outdoor gardens.
Following successful permitting of the site for multifamily development, it was appraised for $18.2 million or $64,700/unit, well in excess of Davis’ carrying value at acquisition of $1 million.
After completing construction and substantially leasing the project we brought it to market in January 2021 through a brokered process that generated significant investor demand. We closed on the sale at a purchase price $134.5 million, or $498,000/unit, in July 2021.