The September sale of AVA Theater District, a downtown Boston high-rise, by AvalonBay Communities to Carmel Partners proved the liquidity of large-scale urban core transactions in a market that was feeling the pressure from rising interest rates and a decrease in investor appetite for such sizable deals.
The property was one of the first urban core assets to be broadly marketed in the Boston metropolitan area following a period of tightening capital markets. This transaction not only marked a significant achievement for Walker & Dunlop, which facilitated the sale, but also set a precedent for the Boston market and urban core transactions more broadly. It was also the city's largest multifamily deal in more than a year, CoStar reported at the time.
In recognition, the deal earned a 2025 CoStar Impact Award for sale of the year for Boston, as judged by a panel of local industry professionals.
The deal marked a pivotal moment for Carmel Partners, which acquired AVA Theater District as part of its latest closed-end value-add fund, Carmel Partners Investment Fund IX. This acquisition represented Carmel’s second purchase in Boston, a city where they have been strategically expanding their presence. With the unique supply-and-demand fundamentals in Boston’s urban core, where there is a limited pipeline of new market-rate multifamily housing, Carmel had strong conviction in the property's future rent growth potential. They underwrote a renovation program that included cosmetic unit improvements and modernized amenity spaces. This investment resulted in outsize rent growth assumptions, ultimately allowing Carmel to hit the return requirement for their value-add fund and confidently secure approval from their internal investment committee.
AVA Theater District, rebranded as Luka on the Common, saw a groundbreaking milestone for the market, achieving a record-low cap rate at the time of sale. This sale catalyzed further investor confidence, sparking three additional urban core trades in the Boston metropolitan area throughout 2024. By demonstrating that large urban core assets could still command premium prices, this deal effectively reshaped expectations for future transactions in the region.
Perhaps the most innovative aspect of this transaction was how Walker & Dunlop overcame the challenges posed by the transaction's size — guidance was in the low $200 millions. The tightening of capital markets since 2022 had led to a decrease in investor appetite for large-scale transactions, particularly in the core space.
To overcome this challenge, Walker & Dunlop executed a comprehensive and strategic marketing process, casting a wide net to attract a diverse pool of buyers. They encouraged both traditional core capital investors and those with more flexible mandates to underwrite the asset, resulting in 16 offers from a varied buyer pool, including core separate accounts, closed-end core-plus/value-add funds, and private capital. This broad outreach resulted in a highly competitive bid process, allowing them to drive a final sales price that exceeded expectations.
The property sold for $212 million, according to CoStar data and news accounts.
"Boston's multifamily fundamentals are among the strongest in the nation, driven by limited existing and future supply,” Jeff Burns, a senior managing director at Walker & Dunlop, said in a statement. "The housing scarcity has impacted both rent growth and the for-sale condominium market and has enabled us to refinance successfully alongside the team at Carmel."
The successful sale of AVA Theater District stands as a testament to the strength of the Boston market and the innovative approach taken by Walker & Dunlop in navigating the challenges of a fluctuating economic environment. "By bringing the asset to market at a time when investor sentiment was cautious and by carefully managing a diverse buyer pool, we were able to maximize value for the seller while also facilitating a strategic acquisition for Carmel Partners," Walker & Dunlop said in a statement.
About the deal: Carmel Partners financed the purchase with a $137 million, five-year, interest-only loan from Fannie Mae. The 398-unit high-rise at 45 Stuart St. in Boston offers a mix of studio, one- and two-bedroom apartments. Built in 2015, it occupies a site in central Boston measuring just over 21,000 square feet. In September at the time of the sale, the building was more than 98% occupied, according to CoStar.
What the judges said: "Ava Theater District represents a high-impact, strategic investment in one of Boston's most sought-after neighborhoods," said Impact Award judge Stephanie Donlin, senior director at real estate firm Greystar Real Estate Partners. "The property’s prime location in the Theater District, combined with its potential for growth and development, made it a valuable acquisition. The transaction demonstrated strong market confidence and positioned the buyer to capitalize on Boston's vibrant urban core, where demand for residential and mixed-use properties continues to rise. It stood out as a prime example of identifying opportunities in a competitive real estate market with long-term potential for both financial return and community impact."
Fellow judge Garry Holmes, president of RW Holmes Realty Co., noted the "impressive amount of time [spent] on feasibility studies and mapping out the best income. Great result."
They made it happen: The Walker & Dunlop team of Travis D'Amato, senior vice president and managing director; Kevin Gleason, senior director; Brendan Shields, senior director; Maggie McFarland, investment sales associate director; Henry Smith, senior analyst; and Michael Coyne, managing director; represented both the buyer and the seller.