Drucker + Falk Arm Nets $75.5M in Sale, Proving Power of Value-Add Strategy

NEWPORT NEWS, VA – December 29, 2025 – In a transaction that underscores the profitability of strategic real estate investment, DF Ventures, the investment division of Drucker + Falk, has completed the sale of the Compass at City Center apartment community for $75.5 million. The deal with buyer Penzance, a prominent Washington D.C.-area real estate firm, marks the highly successful culmination of a seven-year investment cycle that transformed the property and delivered exceptional returns to its stakeholders.

DF Ventures, which acquired the Newport News property in 2018 for $46.65 million, executed a meticulous value-add strategy that resulted in a 24% internal rate of return (IRR) and a 2.85 equity multiple. These figures represent a significant outperformance of industry benchmarks and serve as a powerful case study in long-term asset repositioning. The sale was facilitated by the Investment Sales team at Berkadia, led by Drew White and Carter Wood, who marketed the property and guided the transaction to its closing.

“This investment was a compelling opportunity to leverage DF Multifamily’s property management platform, and we are proud to have delivered strong results for our investors,” said Eric Skow, Director of Acquisitions at DF Ventures. “We are deeply grateful for their partnership and confidence over the past seven years.”

The Anatomy of a Value-Add Masterclass

The impressive financial outcome was not a matter of chance but the direct result of a calculated, $6.0 million capital improvement program. This investment was strategically deployed to elevate the property from a standard apartment complex into a modern, desirable community that could command higher rents and attract a stable resident base. The core of the strategy was a comprehensive overhaul of both resident-facing amenities and individual living spaces.

A key element of the transformation was the construction of a brand-new, state-of-the-art clubhouse. In today's competitive rental market, a modern clubhouse acts as the social and functional heart of a community, offering spaces for co-working, resident events, and recreation. This addition significantly enhanced the property's curb appeal and provided a tangible upgrade to the resident lifestyle.

Beyond the common areas, the renovation plan extended deep into the apartment interiors. These comprehensive renovations targeted kitchens, bathrooms, and living spaces, updating finishes, fixtures, and appliances to meet contemporary standards. Such upgrades are critical in justifying increased rental rates and are a primary driver for attracting and retaining tenants. By modernizing the units, DF Ventures directly increased the asset's revenue-generating potential.

Finally, targeted enhancements to other community amenities rounded out the value-add program. While specific details were not disclosed, these improvements typically include upgrades to fitness centers, swimming pools, outdoor grilling areas, and landscaping. Each enhancement is designed to improve the daily experience of residents, making the property more competitive and fostering a stronger sense of community, which in turn leads to lower turnover and more stable occupancy.

Outperforming a Volatile Market

The 24% IRR achieved on the Compass at City Center investment is particularly noteworthy when viewed against the backdrop of the broader market. Typical industry benchmarks for value-add multifamily projects generally fall within the 12% to 17% IRR range. DF Ventures' performance nearly doubled the lower end of that spectrum, signaling an exceptionally well-executed strategy from acquisition to disposition. The 2.85 equity multiple, meaning investors received $2.85 back for every dollar invested, further solidifies the project's success.

This seven-year hold period, from 2018 to 2025, spanned a period of significant economic fluctuation, including periods of low interest rates followed by a more challenging, higher-rate environment. The ability to navigate this volatility and still deliver outsized returns speaks to the resilience of the multifamily sector and the expertise of the management team. Research indicates that institutional investors have increasingly pivoted toward Class B, value-add multifamily assets like Compass at City Center, recognizing their reliable performance, strong occupancy, and stable income streams even in uncertain economic times. Drucker + Falk's strategy appears to have anticipated this trend, positioning the asset perfectly for the current market appetite.

A Bullish Signal for the Newport News Market

The $75.5 million sale price is more than just a win for DF Ventures and its investors; it is a strong vote of confidence in the Newport News real estate market and the broader Hampton Roads region. High-value transactions like this serve as a key barometer for market health, signaling to national investors that the area offers fertile ground for capital appreciation.

The acquisition by Penzance, a sophisticated investment firm with a deep portfolio in the competitive Washington D.C. metro area, is especially significant. Penzance's decision to invest in Newport News indicates a belief in the city's long-term economic fundamentals and growth potential. The property's location in City Center, an area that has been a focus of urban revitalization and development, undoubtedly played a role in its appeal.

Such high-profile sales can create a positive feedback loop, attracting further investment into the local economy, supporting property values, and encouraging further development. For a region like Hampton Roads, which benefits from a diverse economic base including military, shipping, and aerospace, continued investment in high-quality housing is critical for attracting and retaining a skilled workforce. The success of Compass at City Center demonstrates that strategic investment in the area's housing stock is a viable and highly profitable endeavor.

The Virtue of Patient Capital

In an investment world often focused on short-term gains, the seven-year hold period for Compass at City Center highlights the virtues of a patient, long-term approach. This was not a quick flip but a deliberate, multi-year repositioning that allowed the full value of the capital improvements to be realized. This extended timeline enabled Drucker + Falk to complete the extensive renovations, stabilize the property at new, higher rental rates, and build a track record of strong operational performance.

This patient strategy also allowed the firm to time its exit to coincide with a favorable market, maximizing the sale price. Drucker + Falk, a firm founded in 1938, leveraged its deep, institutional knowledge and integrated property management platform to oversee the asset throughout the entire lifecycle. This hands-on approach, combining ownership interests with operational expertise, is a hallmark of the company's strategy and a key differentiator that allows it to successfully execute complex, long-term value-add projects. The successful disposition of Compass at City Center provides the firm with fresh capital to redeploy into new opportunities, perpetuating a cycle of strategic acquisition, improvement, and growth.