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A Southwest D.C. multifamily complex has hit the market after the tenants reached a deal to assign their rights under the Tenant Opportunity to Purchase Act, or TOPA, to the owner, making the property all the more attractive to potential investors.
Marcus & Millichap brokers Marty Zupancic and Ryan Murray have been retained to market the 648-unit Capitol Park Plaza & Twins, located 201 Eye St. SW. Zupancic had previously marketed the property in 2022 and had it under contract, but the deal was derailed following a legal battle brought on by the tenants, he said.
Then interest rates increased and D.C.’s multifamily market became more challenged as outside capital fled. To help sell the property this time, according to Zupancic, ownership recently reached a deal with the tenants to pay them an undisclosed sum if it sells in exchange for them ceding their rights under TOPA, a 45-year-old D.C. law that gives tenants first right of refusal to buy a property when a landlord wants to sell.
The agreement will allow the owners, CP Property, to sell the building much faster than if TOPA were activated, according to Zupancic.
“Now we have a situation where it’s just like any other state,” he said. “You come in, you study the property, and you close, and there’s no process that slows down or ties up the building.”
TOPA has been a hot topic as of late as D.C. Council considers The RENTAL Act, Mayor Muriel Bowser’s signature piece of housing reform legislation aimed at speeding production and amending TOPA, which developers say has helped sap D.C. dry of institutional investment in multifamily. The legislation is headed to a final vote in September.
“I had no idea how difficult the TOPA process is, or I should say, has become,” said Brian Wilson, president of property owner CP Capital, whose family has owned the Capitol Park Plaza & Twins since 1973. “I think it’s really been, honestly, hijacked by some opportunists that use it as a point of leverage to extract as much money out of owners and developers as possible.”
With TOPA no longer an issue, Zupancic said the property is drawing more interest from owner-operators in D.C., as well as regional and national investors. “That has definitely changed the landscape, as far as interested parties, and who would look at this and go after it,” he said.
The deadline for offers is Sept. 26, he added.
Paul Strauss, an attorney who represented the tenants, said the tenants were happy to put the matter behind them.
“We were pleased to have been able to work together to reach an agreement which maintains the affordability of the property and avoids any displacement of the existing residents,” Strauss said in a statement.
Marketing materials tout the property as an “opportunity to acquire a prominent multifamily asset of scale in an area that is rapidly transforming into one of the premier waterfront submarkets in the country, driven by large-scale development projects,” noting its proximity to the Wharf, The Yards and Buzzard Point.
Capitol Park Plaza was substantially renovated in 2002 using Low Income Housing Tax Credits (LIHTC) and was placed back in service in 2004, according to marketing materials. The LIHTC use period for the property expires in 2034, “providing an investor with an opportunity to reposition, redevelop, or dispose of the asset at expiration,” marketing materials say.
The property, designed by architect Chloethiel Woodard Smith, was built in 1965, according to marketing materials.
Read more at the Washington Business Journal.
View Capitol Park Plaza & Twins.
Marcus & Millichap is the nation’s largest brokerage firm focused exclusively on investment sales. It is based on a simple premise: matching each property with the largest pool of pre-qualified investors. With over 2,000 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research, and advisory services. Founded in 1971, the firm closed 8,954 transactions in 2020 with a value of approximately $43 billion. Marcus & Millichap has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more about the company, please visit www.MarcusMillichap.com.