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Business Observer Wednesday, Aug. 18, 2021 1 month ago

Multifamily momentum mows down other sectors

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Apartment deals once again rule top commercial real estate sales through the first half of 2021.
by: Kevin McQuaid Commercial Real Estate Editor

Fueled by gains in population and job growth, lower home ownership rates, a lack of single-family home inventory and a desire for mobility, apartment transactions have dominated Gulf Coast commercial real estate sales since 2016.

The first half of 2021 was no exception.

Eight of the largest 10 transactions in the nine-county region involved multifamily rentals, as investors clamored to take advantage of rental rate increases and solid occupancy.

In most instances, the properties were of a new vintage. From a geographic perspective, perhaps not surprisingly most of the projects are located in the Tampa Bay area. Of the 10 largest deals, seven are located in Tampa Bay or its surrounding suburbs.

 

  1. MORGAN PROPERTIES’ PORTFOLIO: $241.62 million

As part of a massive $1.75 billion portfolio deal — the largest in the U.S. in more than a year — Pennsylvania-based Morgan Properties and Olayan America spent $241.62 million to buy four Tampa Bay multifamily rental complexes, property records indicate.

Morgan Principal Jason Morgan noted that the Tampa Bay area was the “top relocation destination for Americans who moved during COVID-19.”

The four area apartment complexes are the Park at Lake Magdalene Apartments & Townhomes in Tampa; Tuscany Pointe at Tampa; Reserve at Lake Pointe in St. Petersburg; and Melrose on the Bay, in Clearwater.

In all, they contain 1,972 units.

Each was completed between 1974 and 1986 and remodeled in 2015. Morgan and Olayan intend to invest about $12 million into the four complexes to modernize them.

Rents range from $895 monthly to $2,531 per month.

In all, Morgan — the nation’s largest privately held owner of apartments with roughly 90,000 units — and Olayan, a division of a Saudi Arabian-based investment firm, acquired 48 apartment communities containing 14,414 units in its late February deal.

 

  1. DISCOVERY VILLAGE PORTFOLIO: $129.73 million

In May, Lone Star Funds bought five Discovery Village senior living communities along the Gulf Coast for $129.73 million.

Like the Morgan Properties’ transaction, the Dallas-based investment firm’s acquisitions regionally were part of a larger purchase involving multiple states.

In all, Lone Star bought 10 properties in Florida, Georgia and Texas containing 1,428 units from Healthpeak Properties, for a total purchase price of $334 million.

Lone Star has retained Discovery Senior Living to manage the portfolio.

Along the Gulf Coast, Lone Star’s new Discovery Village communities are located in Tampa, Bradenton, Fort Myers and Naples.

 

  1. DRAGSTRIP LOGISTICS CENTER: $108.74 million

Intercontinental Real Estate Corp.’s $108.74 million purchase of the Dragstrip Logistics Center, in Lakeland, marks the lone non-residential deal to crack the Top 10 in the first half of 2021.

The sale of the Dragstrip Logistics Center in Lakeland was the largest industrial transaction in the region in over the past year.

The acquisition of the 710,962-square-foot distribution center also highlights the continued demand for high-caliber industrial properties in the Interstate 4 Corridor, between Tampa and Orlando.

The price also reflected the value of tenancy by Amazon, which boomed during the COVID-19 pandemic as shoppers increasingly avoided brick-and-mortar shopping centers in favor of Internet purchases.

Boston-based Intercontinental says it was drawn to the 8100 State Road 33 property because of its location and opportunity for “long-term cash yield.”

The deal also marked the largest industrial transaction in the region in the past year.

Cushman & Wakefield, which marketed the property for sale on behalf of former owner Ackerman & Co. and TransWestern, noted that Dragstrip Logistics is one of the few Interstate 4 industrial buildings with a 40-foot-clear ceiling height.

 

  1. ALTIS PROMENADE: $92.88 million

         Irvine, California-based Passco Cos. has been among the more active apartment investors in Florida over the past five years, amassing a portfolio of 15 complexes.  

         Its latest acquisition involved the 338-unit Altis Promenade community in Lutz, developed by Altman Cos. and completed in 2020.

        

Courtesy. Altis Promenade was 98% leased when it was acquired.

Passco officials say they were drawn the four-story complex because of its location, quality and plethora of amenities.

         Colin Gillis, a Passco acquisitions executive, calls it the “crown jewel” of the company’s Tampa Bay portfolio.

         At the time of its purchase Altis Promenade was 98% leased.

 

  1. PALMORE APARTMENTS: $88 million

         Like Passco, Wellington-based Bainbridge Cos. has a well-established track record for developing upscale apartment projects and then selling them for top-dollar prices.

         In April, the company parted ways with its Palmore Apartments, in Sarasota, when it struck a deal with Westbrook Partners of Palm Beach Gardens.

         The company began developing the 430 N. Cattlemen Road complex, near Interstate 75, in 2018 and completed it a year later.

         Rental rates in the complex range from $2,179 per month to $4,540 per month for units ranging in size from 751 square feet to 1,450 square feet, according to multifamily rental researcher Apartments.com

 

  1. LOTUS AT STARKEY RANCH: $87 million

         In a reflection of the growing popularity of Pasco County, Washington, D.C.-based RSE Capital Partners spent $87 million to buy the newly renamed Lotus at Starkey Ranch apartments.

         Formerly known as Volaris at Starkey Ranch, the 1610 Long Spur complex, in Odessa, was completed in 2018 and contains 384 units.

         Two years ago, RSE Capital and a partner acquired the 21-story, 340-unit Icon Harbour Island luxury multifamily rental tower for $131.5 million.

         With Lotus at Starkey Ranch, RSE Capital owns more than a dozen Gulf Coast complexes.

 

  1. MILANO LAKES APARTMENTS: $80.5 million

         Few investment firms nationwide have been as active in the multifamily rental space as Blackstone Group, and the New York-based investment giant continues to push into the sector.

         In June, the company bought the Milano Lakes Apartments, in Naples, for $80.5 million from developer FL Star Development, property records indicate.

         FL Star completed Milano Lakes in 2018.

         Rental rates in the community range from $1,773 to $3,475, according to the complex’s website, and unit sizes from 808 square feet to 1,439 square feet.

         Milano Lakes was also the second apartment project Blackstone invested in along the Gulf Coast this Spring. In April, it bought the Cortana South community at 5145 S. Dale Mabry Highway, in Tampa, for $76.5 million, records show.

         Like Milano Lakes, that 300-unit complex was completed in 2018.

 

  1. (TIE) WILDGRASS APARTMENTS: $80 million

         A pair of companies tied to former Shugart Corp. President and CEO Dennis I. Narlinger purchased the Wildgrass Apartments in the Riverview section of Tampa for $80 million.

         Narlinger’s groups bought the three-story community, at 13555 Yellow Fern Way, from an affiliate of Tampa-based Blue Sky Communities, which is best known for developing affordable housing.’

         The 320-unit Wildgrass development was completed in 2019.

         Rents there range from $1,735 monthly to $2,470 per month for units measuring 754 square feet to 1,287 square feet.

         Wildgrass Apartments features a unique eight-acre park with a paved walking trail, among other amenities.

 

  1. (TIE) ARCOS APARTMENTS: $80 million
    Courtesy. Virginia-based Snell Properties purchased the 228-unit Arcos apartments in downtown Sarasota in April

     

         Virginia-based Snell Properties purchased the 228-unit Arcos apartments in downtown Sarasota in April in its first Florida acquisition.

         At the time of its purchase from Tampa’s Framework Group and Forge Capital Partners, Arcos was 97% occupied with average rents of $2,100 per month.

         Peter Colarulli, a Snell Properties’ vice president, says the company was attracted to Arcos because of its Central Florida location and proximity to downtown amenities.

 

         10. LAKESHORE CLUB APARTMENTS: $77 million

         Covenant Capital Group, a Nashville firm that owns more than a half-dozen apartment projects throughout Florida, in May bought the 638-unit Lakeshore Club Apartments in Tampa for $77 million.

         Cushman & Wakefield arranged the sale of the complex, on 66 acres at Egypt Lake, on behalf of seller Neil Sazant, principal of Harbour Realty Advisors Inc.

         Covenant Capital, which has vast experience repositioning apartment complexes and improving aging or neglected properties, intends to invest at least $9.5 million to upgrade the 6900 Concord Drive community.

 

 

 

 

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