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Apartment Income REIT cancels master lease on 110-unit Silicon Valley apartment complex

Outfit pays erstwhile parent $200M termination fee for four properties, including one in Redwood City

Apartment Income REIT's Terry Considine and 707 Leahy Street (Apartment Income Reit, Apartments)
Apartment Income REIT's Terry Considine and 707 Leahy Street (Apartment Income Reit, Apartments)

Residential landlord Apartment Income REIT is paying $200 million to terminate a master lease on a portfolio of properties that include a 110-unit apartment complex in Redwood City, part of a larger deal that sorts out various relationships between the two entities.

The termination covers a total of four properties across the U.S. that are leased to Apartment Investment and Management Company (Aimco), according to documents filed with the Securities and Exchange Commission. Apartment Income REIT spun out of AIMCO in 2020, becoming a separate company that’s now led by Terry Considine, the founder of both companies.

The Redwood City apartment complex where Apartment Income REIT will resume operational control is located at 707 Leahy Street. It contains a mix of studio, one-bedroom and two-bedroom units with rents ranging from $3,330 to $4,740, according to a listing on Apartments.com The other properties in the portfolio include the North Tower at Flamingo Point in Miami Beach, the Prism Apartments in Cambridge, Massachusetts and the Fremont Residences on the Anschutz Medical Campus in Aurora, Colorado. The portfolio contains 865 units with the average monthly rent at $3,400.

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Aside from the lease termination, the two firms also closed several other agreements. The two sides finalized a deal that allows Aimco to prepay a $534 million loan to AIR. Under the terms of the transaction, Aimco is on the hook to pay a yet-to-be-determined penalty based on interest rates.

The two sides also agreed to a deal under which AIR will sell a $7 million stake in 16 properties to AIMCO. The assets included in the deal secured the $534 million mortgage. The firms also amended a lease agreement, giving AIR the right of first offer for Aimco-developed properties that will be put on the market within 12 months after stabilization.

AIR recently closed a large acquisition in Miami. The firm paid $211 million for the Watermarc at Biscayne Bay, a 296-unit residential complex in the city’s Edgewater neighborhood.

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