The 21-story Promenade apartment complex in Bethesda has been sold for $54 million to a Chicago redeveloper who is expected to convert the buildings to cooperative ownership.
Washington developer Nathan Landow, owner of the 1,072-unit rental complex at Pooks Hill, said that American Invsco, a major converter of rental apartment buildings in large cities, has purchased the two-building complex. The 24-acre site includes a large outdoor pool with three acres of sundecks.
Built in the early 1970s, the Promenade has been fully occupied much of the time. Rents now range from $325 to $725. There are also four penthouse apartments with rents of $1,500 a month.
Landow said the transaction was all cash, with the purchaser taking over an existing $23 million mortgage held by Metropolitan Life Insurance Co.
The price paid for the complex sets a new record here for the sale of a rental complex to a redeveloper.
American Invsco last year converted two of the Grosvenor Park apartment buildings in Bethesda to condominium ownership. The Chicago firm has arranged approximately $30 million in cooperative mortgage loans for prospective purchasers with Washington Federal Savings & Loan Association here.
While tenants in the Promenade had not been notified officially of the sale earlier this week, there had been rumors about the pending transaction for more than six months. After they receive official notification of the sale, the Promenade tenants will have 150 days to organize an association and purchase the building at the same price. If the procedure goes according to similar conversions, it is likely that the new owner will offer current tenants special prices on their own units to avoid a counter purchase of the entire complex.
In many conversions here, tenant organizations have dickered with condominium redevelopers to obtain prices lower than those originally offered. Other apartment complexes, including the large McLean Gardens in the District, have been purchased by tenant coalitions, which in turn have acted as the redevelopers of the properties from rental to condo or co-op ownership.
In Montgomery County, where a voluntary tenant relocation program has been in effect for some months, legislation is under consideration that would impose a 4 percent transfer tax on condominium conversion sales, with the proceeds to be earmarked for aid in tenant relocations. That tax is being opposed by a coalition headed by the Montgomery County Board of Realtors.
In discussing the reasons for selling a prime rental apartment property at this time, Landow said he had to consider the attractiveness of the purchase offer and the effect of rent-control guidelines on his efforts to keep up with constantly rising costs of maintenance, management and heating and cooling.