‘B’ Positive

WEYMOUTH — As a multifamily investor who has doled out more than $100 million over the past two years on regional apartment projects, Universal Realty President Stuart R. Levey has spent the bulk of that capital on older, Class B product, several dating to the 1960s and often held for decades by the same owners who are now cashing in on the white-hot metropolitan housing market. The Newton-based operation did acquire the upscale Linden Square Townhomes in Wellesley last summer for $25.6 million, and is now peddling the 64 units there as upscale condominiums, but Levey says his passion and platform is focused on the older apartment stock where a value-add campaign can deliver impressive rewards, he recounts to Real Report following Universal’s latest conquest, a 211-unit property in Weymouth acquired last week for $25.7 million from AvalonBay Communities. Comprised of 15 buildings on an 8.2-acre parcel, AvalonBay had owned Weymouth Place since paying $21.5 million in Sept. 2007.

“We try to deliver affordable but good quality Class B apartments,” Levey explains, terming it a strategy of “appealing to the masses” rather than pursuing the more restrictive luxury arena in stressing that, “There is not any other market I would want to focus on.”

Universal is hardly alone in its approach, with other local players helping to turn around aging apartment developments including Jeff Bruce of True North Capital Partners, Somerville investor Philip Privitera and the Mayo Group. Advocates are served by a host of multifamily brokerage houses who tend to offer properties of all spectrums but have assisted dozens of owners in the past 24 months seeking to harvest legacy properties in the current climate. CBRE/NE was the broker in the case of Weymouth Place, a garden-style complex that AvalonBay acquired as part of its own value-add fund, a vehicle that snapped up hundreds of units in Greater Boston in recent years and traded several of those communities in 2013, with CBRE/NE also the broker on AvalonBay properties that changed hands in Billerica ($40.2 million) and Burlington ($79.8 million) on top of Weymouth Place, a property listed in 2013 but that kicked into the new year. CBRE/NE’s multifamily sales team is led by veterans Simon J. Butler and Biria St. John, a group that processed more than $1.1 billion in 2013 and has already completed several deals of note to begin 2014.

Levey estimates “65 to 70” of the units at Weymouth Place still need to be upgraded, and there are also plans to make capital improvements to common areas and the landscaping, he says, with Universal backing its purchase with $21.3 million in Freddie Mac financing secured through Prudential Affordable Mortgage Company LLC. “We intend to elaborate on what AvalonBay did there,” Levey says of what the funding is being used for beyond acquisition costs.

“We are going to pick up where they left off.” An earlier Real Reporter story on the listing cited estimates that 17 percent of the kitchens and bathrooms were improved under AvalonBay’s watch, with the REIT replacing all windows in the complex and overhauling its fitness center and leasing office.

Levey says he was drawn to Weymouth Place partly by strong demographics and a location right off Route 3 that is approximately equidistant between Boston and Cape Cod. “It’s perfect,” he says. Developed between 1968 and 1971, Weymouth Place sold at “a significant discount to replacement cost,” according to one analysis. Levey says the Universal portfolio today has about 1,500 apartments in its quiver.