After Two Big Deals With Universities, UIP Has More Acquisitions Coming

DC-based Urban Investment Partners has been ramping up its acquisition game—closing two major deals with universities this year—and has no plans of slowing down. 

In February, the developer bought three American University office buildings, with plans to reposition two of them into apartments. This month, UIP bought a former George Washington University dorm on Virginia Avenue.

"We joked after we bought the buildings in Tenley that if we were to buy [the GW dorm] then we would then be able to say 'we're the most prolific buyer of real estate from private universities in the District of Columbia,' principal Steve Schwat, above, says. "I'm not sure what that gets us."

Steve tells Bisnow that what has been a "banner year" for UIP, with more than $80M in acquisitions, will likely grow to well over $100M, with other deals in the works he expects to close by year's end. 

While the first thing they look at is typically Metro access, UIP's VP of development, Brook Katzen, right, says properties around college campuses are also very attractive for development.

"Universities are economic anchors of neighborhoods," Brook says. "They stabilize submarkets because they are major employers."  

"No doubt the transaction with American University gave us a certain degree of credibility with George Washington," Brook adds. "It was very recent, it was very similar, and it established a track record of executing something specific."

Steve also has a personal connection with both neighborhoods. He met his wife in a sophomore math class at GW (which he jokes he nearly failed). 

At the time, the dorm he just bought was a Howard Johnson hotel (see the vintage Howard Johnson ads on the wall above). The Watergate burglars stayed in the building during their stakeout in 1972. 

The building's history interested Steve, but it was its Foggy Bottom location that ultimately sold him on it. 

"We saw great location, the Watergate is popular, Foggy Bottom is popular, Georgetown is popular," Steve says. "I think we saw a lot of markets that we could draw from."  

The developer's $44M renovation, rendered above, includes repositioning the existing 97k SF building into 200 Class-A apartments and creating another 50 units by extending the building an extra 40k SF. 

"From an execution standpoint, it's very similar to what we’re good at and what we’re accustomed to doing," Brook says. "Taking an existing, underutilized structure in a great location and repositioning it into Class-A apartments, expanding it and adding density. It's very similar to what we’re doing in Tenleytown and elsewhere."  

Another familiar neighborhood, Tenleytown is where Steve and his wife lived after they got married and where they had their kids. He remembers in the '80s when the CVS was the original Hechinger hardware store.

In addition to the location, Steve and Brook saw the neighborhood as having untapped multifamily potential. 

"That Jemal building (Douglas Development's 4600 Wisconsin Ave project) is the first 60 units of rental to deliver in Tenley," Steve says. "There’s no other rental in Tenley, so we saw it as a wide open space, it's near a university."

"There’s a Metro station, a Whole Foods, a CVS," Brook adds. "It has all the infrastructure, just no apartment buildings yet."

Responding to this unmet demand, UIP is planning to redevelop one of the three AU buildings it bought with another building on Wisconsin Avenue into one building with 155 residential units and 12k SF of retail. Another of the three buildings on Brandywine Street will be converted into 100 apartments.  

Steve couldn't go into detail on the other deals he has in the works, but he says he has noticed a trend of rapid growth in the types of properties UIP is buying.

"There’s been a very consistent and structured growth in the company," he says. "I think we focus on larger deals, we're not focusing on 12- and 20-unit buildings anymore, were focusing on 60-, 80-, 100-, 200-unit buildings. We're not closing two deals a year. Now, we're closing six or eight."