It took five months, but the first acquisition of the year by a multifamily REIT recently closed when AvalonBay purchased the Verona Apartments in Bellevue, Wash., on May 8.

The $33.1 million deal represented a steep discount, 45 percent below the company’s estimated replacement cost of the community, or what it would cost to build it today. The seller was Northwestern Mutual Life Insurance Co., which acquired the property in early 2000 for about $24.5 million.

But the year’s first REIT acquisition isn’t exactly a signal that the transaction market will suddenly pick up, according to New York-based market research firm Real Capital Analytics. “In a period where there’s not a lot of good news, it’s a positive sign, but not a huge one,” says Robert White, president of Real Capital.

White notes that over the past two months, more large deals (of $30 million or more) have occurred, and that sales volume was up slightly in April, while the level of new offerings was down. “Taken altogether, it’s all positive on a relative basis, but on an absolute basis, the market is still stuck in the mud,” he adds.

The deal for the 220-unit structure was the first to be done through AvalonBay’s Value Added Fund II, a $400 million equity fund that closed in April. The Alexandria, Va.-based company says that while the acquisition market overall is still very sluggish, there are signs that buyer and seller expectations are starting to converge. “It appears that the rate of change for cap rates is slowing, there’s still a good amount of capital available through the GSEs, and that sellers are beginning to accept the value changes,” says Lili Dunn, AvalonBay’s senior vice president of investments. “What we’re seeing is more stressed sellers, not necessarily distressed properties.”

While Verona Apartments was well maintained, the company said it plans some light physical enhancements. And over the long term, AvalonBay sees upside in rehabbing and repositioning the property, though “given current market conditions, that’s not our expectation over the next year or so,” Dunn says.

The acquisition expands the company’s presence in Bellevue, where it owns and operates Avalon Bellevue and Avalon Meydenbauer, and also has a 400-unit high-rise currently under construction called Avalon Towers Bellevue, which broke ground last fall.