The property is a 424-unit rental development in Fairfax County in Northern Virginia, just west of Washington. The buyer is Comstock Homes, one of the largest residential developers in Virginia, Maryland and North Carolina. Comstock, which plans to convert Penderbrook to a residential condominium, closed on the acquisition in early February.

The determination to sell Penderbrook was made in the spring of 2003. It quickly became evident that to attract the most lucrative market segment — buyers who purchase with the intent to convert to a residential condominium — a local zoning variance would be required.

Securing Entitlements

Observes Vincent Sultana, Vice President in charge of W&M's residential portfolio, who headed the zoning variance project with local residential team leader Tom Panagos: "We had no prior experience with local zoning authorities. We identified the issues at hand, determined who were the best local experts and counsel, and worked closely with in-house Wien & Malkin and W&M Properties personnel to secure all needed entitlements for the property."

"This is the quintessential 'value-added' type of investment for which Wien & Malkin is so well known," says Anthony Malkin, President of W&M Properties, the acquisition, management and marketing arm of the Malkin family.

"We bought an under-managed, under-performing property with physical flaws in a great location, made improvements, and managed it aggressively," he says. "Recently, its market value reached the point where, in our judgment, a sale would yield a return that is greater than what we project for continuing ownership over the next 10-20 years."

Confidence in the Market

George S. Perry, W&M's Senior Vice President and Director of Investments, says Penderbrook Apartments was acquired from an insurance company that had financed the original development. "We immediately reinvigorated the property, established a reserve for continuing improvements, and put new life in its marketing," he explains. "We were confident that Fairfax County was a great market that would improve dramatically over time."

Wien & Malkin Chairman Peter L. Malkin says: "We are gratified to have received this outstanding result on behalf of our investors. The capital rich market conditions that have prompted us to slow our rate of investment persuaded us that, over the long term, Penderbrook investors would be better served as sellers today rather than as owners."

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