Upstart Developer Audeo Partners Buys Site, Gets Approval For First Project In Virginia

Audeo Partners, an Arlington-based real estate investment firm founded by two former MidCity executives, had a difficult time landing deals in the highly competitive period after its 2021 launch, but the firm is now moving forward with its first multifamily development.

The firm secured a key zoning approval Tuesday evening for a 280-unit development featuring apartments and townhouses in Dumfries, Virginia, co-founder Madi Ford told Bisnow. The former senior vice president and general counsel at her family's company, MidCity, Ford launched Audeo in April 2021 with fellow MidCity alum Michael Meers.

She said securing the approval, which came after it acquired the property out of foreclosure, "feels very validating" after spending more than a year looking for deals. 

“We had a very hard first year," she said. "It was very competitive. Debt was almost free and there was a crazy amount of equity running around, so deals were super-competitive."

In order to find deals in the competitive market, she said she had to look farther away from the District and its close-in suburbs, where she has spent her career working with MidCity and where Audeo is based.

"We are looking further south, most of our projects are outside of the traditional Northern Virginia market, where it's still very price-competitive," Ford said. 

“We've also been very scrappy,” she added. 

She said the other deals her firm is working on are also in Virginia along the I-95 corridor between D.C. and Richmond. 

“That's a very intentional choice,” Ford said, “We like the job growth. We like the vision for economic development. We think it's a very business-friendly state.” 

For the Dumfries deal, Audeo purchased distressed notes from a local bank and negotiated a deed-in-lieu-of-foreclosure transaction. The previous owner of the property had planned a 317-unit project with commercial space before selling it to Audeo for $9.75M. 

“I think there's a lot of people who don't have an appetite for that," she said. "But we were very confident we could execute and provide a positive return for our investors, and we're proving that true.” 

The development on a 10-acre site along the town’s Main Street will consist of 220 apartment units, amenities and a garage, plus 60 single-family townhomes. 

In addition to the multifamily site, the firm acquired an office building around the corner. Ford said they just secured a retail tenant for the ground floor that has yet to be announced. 

The projects are part of what Ford said is a revitalization effort by the town, especially for Main Street. She pointed to the $2.5M plan to dredge Qituantico Creek and two age-restricted multifamily developments in the works, plus the Rose Gaming Resort set to deliver near Audeo's property in 2024.

“There's been a significant amount of development in Potomac Shores,” she said. “We believe that Dumfries is the next area to be redeveloped in that corridor, and we're very excited to be a part of it and to partner with the town in that effort.” 

Audeo Partners is developing 26 ground-up townhomes in Richmond, and Ford says the firm has other by-right projects in the works that haven’t been announced yet. 

The firm still needs to obtain financing before breaking ground on the projects, and Ford said the slow capital markets environment is making that challenging.

The rising interest rates and tightening credit market, plus inflation and labor shortages, have made it difficult for even established development companies to get projects off the ground. 

"I know lots of developers who have projects on hold basically until 2024," Ford said. 

Audeo Partners got its feet off the ground during a cutthroat commercial real estate environment, and Ford said her company felt the burn early on. But she says for Audeo, losing out on some of those deals early on was a blessing in disguise.

"Some of the deals we lost out on people ended up overpaying," Ford said. “I'm very grateful today to be where we are with the deals we have and not underwater, having overpaid and kind of a frenzy period. So we ended up being very fortunate there.”