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Business Observer Friday, Aug. 12, 2005 13 years ago

Real Estate Briefs (Tampa)

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Deal of the Week: Ballast Point Pays $61 Million for RentalsTroubled rental property bought for $12.5 millionOrlando's Capital Partners targets Tampa for growthBoston investor buys 396 apartments for $19 million
by: Adam Hughes Staff Writer

Real Estate Briefs (Tampa)

By David R. Corder

Associate Editor

Ballast Point Pays $61 Million for Rentals

The partnership of James Chadwick, Bruce Keene and Steve Sembler has embarked upon one of its biggest condominium projects. Earlier this month, an affiliate of their Ballast Point Group paid almost $61.1 million for the 689 rental units at South Tampa's Cove Apartments.

Although plans are tentative, the St. Petersburg-based partnership intends to demolish the 50, multistory buildings at 4003 S. West Shore Blvd. and rebuild the 25-acre site into a condominium community.

"No, it's not a condo conversion, or that was not our intent," Keene tells Gulf Coast Business Review. "Our intent is actually a redevelopment of that property, which we are discussing in terms of concepts and everything else as we go. We plan to build back a for-sale product.

It's a pricey acquisition, too, since the partnership paid about $2.44 million an acre for the waterfront site. That's more than threefold the price paid recently for a condo redevelopment project just two blocks to the south.

Earlier this year, the joint venture of Chicago's Walton Street Capital and Fort Lauderdale's Motta Co. LLC paid $125 million or about $771,604 an acre for the 162-acre Georgetown Apartments.

There's another way to look at the comparison, Keene says. From his point of view, the partners paid only about $88,6067 a unit for the 689 units built in the late 1970s. That compares with the $200,321 a unit the Walton Street-Motta venture paid in April for the 624 Georgetown units.

However, the Walton Street-Motta venture proposes the redevelopment of 1,200 condo units on the Georgetown site.

"Obviously, we're grand fathered in for the 689 units," Keene says. "We're doing a great deal of market work to determine what the final product and the final count will be. We have a lot of work before we'll have final plans."

This project far exceeds most of the partnership's prior development work. A few years ago, the partnership developed the 478-unit MacAlpine Place apartments on a vacant 52-acre site in Dunedin. Last year, the partnership sold the apartment community to United Dominion Realty Trust Inc., a Richmond, Va.-based publicly traded real estate investment trust.

Although neither party disclosed terms of that deal, United Dominion reported in a Dec. 13 press release it paid an average of $108,618 each for 1,114 rental units at two apartment communities in Florida. One of those was MacAlpine Place.

The newly acquired project also exceeds the partnership's redevelopment work at the Grande Verandahs on the Bay, 84 waterfront condo units on the west side of the Gandy Boulevard in St. Petersburg, and the Seagate at St. Joseph Sound, 33 waterfront condo units near Dunedin. The Seagate has sold out, and only seven units remain open at Grande Verandahs.

Founded in 1998, the partnership has strong ties to St. Petersburg's Sembler Co., a retail developer company founded by Mel Sembler, the U.S. ambassador to Italy. Steve Sembler, a licensed attorney, is one of his sons.

Besides his work with Ballast Point, Chadwick also is licensed attorney practicing in the St. Petersburg law firm of Renfrow & Chadwick. That's a firm once known as Renfrow Chadwick & Sembler Inc.

Troubled rental property

bought for $12.5 million

BUYER: Renaissance Conversions LLC, Miami.

SELLER: PDQ Kenaliz LLC, Boca Raton.

PROPERTY: Amberwood apartments, Tampa.

PRICE: $12,500,000

PRIOR SALE: $4,000,000 in 2000.

LAW FIRM ON DEED: Gillespie & Allison PA, Boca Raton

PLANS, DESCRIPTION: Tampa's Amberwood apartment complex, once a fixture in the media's klieg lights, has been sold for $12.5 million.

About three years ago, controversy enveloped the 212-unit rental property at 301 Oak Rose Lane. Code enforcement officials cited its owner, a company controlled by New York real estate investor Steve Green, with multiple infractions.

Soon, about $1.3 million in fines accrued on the 11-acre site north of Fowler Avenue between Florida Avenue and Interstate 275. TV and print media documented nearly every stage of the saga.

The fines became so much of a problem that Green's company, Amberwood Realty Corp., defaulted on a $9.5 million loan through Wells Fargo Bank.

Two years ago, a Boca Raton investment group cut a confidential deal with the bank. The investment group, PDQ Kenaliz LLC, then bought the property at auction for $100. Members of that investment group included Boca lawyers Alan Kaye, Bowen Gillespie and Don Allison.

It appears they negotiated a pretty good deal. They subsequently mortgaged the property for $6.4 million.

Just recently, PDQ Kenaliz sold the property to Miami-based Renaissance Conversions LLC. That venture's partners include Hacienda Los Angeles Corp., an Ocala area company managed by Jorge Redondo, and RB Managers LLC, a private Miami-based company managed by Raul Benitez.

The buyers financed the acquisition with a $12.9 million loan through UnitedBank FSB. It's uncertain what the new partnership intends to do with the property. Redondo, who signed the mortgage documents, did not respond to a request for information.

Orlando's Capital Partners

targets Tampa for growth

BUYER: Capital Partners Inc., Orlando

SELLER: Highwoods Properties Inc., Charlotte, N.C.

PROPERTY: 15 office buildings in Tampa's Sabal Park.

PRICE: $103 million (estimate).

PRIOR SALE: Unavailable.

LAW FIRM ON DEED: Greenberg Traurig PA, Orlando

PLANS, DESCRIPTION: Orlando's Capital Partners Inc. made a strong statement late last month with the acquisition of 940,000 square feet of office space in Tampa's Sabal Park. It's a market the privately owned Orlando company prizes in its strategy to become one of the largest owners of office properties in the Southeastern United States.

"We have a commitment to Tampa, yes," says Troy Cox, one of Capital Partners' three principal officers. "We are looking to buy."

Last month, the Orlando company purchased a total of more than 2.4 million square feet of office space in Charlotte, N.C., and Tampa for $228 million from Highwoods Properties Inc., the Raleigh, N.C.-based real estate investment trust (REIT).

The Tampa market means so much to the Orlando company it has recruited one of area's top commercial brokers. It hired Kyle Burd, who spent about two decades in the Tampa office of CB Richard Ellis and heads its private capital investment group. Burd did not participate in this deal, however.

"Tampa is a very important market for us," Cox says. "It's been hard to buy stuff lately, and we're happy to do this transaction."

This deal comes with some history. In 1997, Jim Heistand, the Orlando company's founder and majority shareholder, sold a portfolio of about 6.8 million square feet of office space to Highwoods Properties for $622 million. Heistand spent the next two years with the REIT and then formed Capital Partners.

Neither Cox nor Steve Meyers, the REIT's Tampa vice president, would disclose details of the transaction. Cox described the acquisition as a package deal only, with Tampa accounting for about 40% of the deal.

However, local property records show the Orlando company paid at least $103 million for the 940,000 square feet of office space and two acres in Tampa's Sabal Park. That's at least $100 a square foot for space in 15 office buildings, though local market experts say some of the property's Class A space could be worth as much as $150 a square foot.

The divestiture represents more than 21% of the REIT's Tampa-area holdings. Prior to the sale, financials show, it owned and managed slightly more than 4.4 million square feet in the Tampa-area market. That's about 13% of the REIT's total U.S. holdings of almost 35 million square feet.

Part of about $130 million in net proceeds from the sale will be used to redeem preferred shares of Highwoods' publicly traded stock, Meyers says. The rest will fund development.

"We need to generate capital to fund new development," he says. "What we love to do is dispose of older assets and replace them with brand new ones."

That's what's happening in Tampa, Meyers says. Later this year, the REIT expects to complete work on a new 12,000-square-foot office building in the Westshore district for the Federal Bureau of Investigation. That property is valued at about $27 million.

Meanwhile, Meyers says, the REIT is focused on tenant leasing operations for two proposed office buildings in the planned Highwoods Bay Center in Westshore. It proposes the construction of two, 7-story buildings with about 418,000 square feet.

"(The divesture) has enhanced our ability to continue developing," Meyers says.

Boston investor buys 396

apartments for $19 million

BUYER: Patricia Associates LP, Boston

SELLER: Boones Dock II LP, New York.

PROPERTY: Boones Dock apartments, 3303 N. Lakeview, Tampa.

PRICE: $18,850,000.

PRIOR SALE: $9,200,000, 1992.

LAW FIRM ON DEED: Brown Rudnick, Boston

PLANS, DESCRIPTION: A corporation controlled by Paul Krupp, a member of a Boston family with extensive real estate holdings, has purchased the 396 rental units at Tampa's Boones Dock apartment community.

Boston-based Patricia Associates LP paid almost $18.9 million, or about $47,601 a unit, for the property north of Bearss Avenue and on the east side of Dale Mabry Highway. That's about 105% more than the seller, Boones Dock II LP, paid in 1992 for the 29 buildings built in 1983 on 25 acres.

Boones Dock lists as its managing member North Lake Realty of Tampa Inc., a company controlled by New York investors Robert and Dina Morrow.

Patricia Associates lists its managing members as Patricia Paul Corp. and Paul Krupp, Patricia Karen Corp. and Karen Kroner and Patricia Philip Corp. and Douglas Krupp.

Douglas Krupp serves as chairman of Boston's Berkshire Income Realty Inc., a publicly traded real estate investment trust. No one at the Boston REIT, the affiliated Berkshire Group or the Krupp Group of Funds would talk about the sale or refer calls to Paul Krupp.

About 36 years ago, Douglas Krupp and his brother, George, co-founded Boston's Krupp Cos., Berkshire Income financials state. That company evolved into the Berkshire Group, a real estate financial services firm with a focus on acquisitions and mortgages.

In 2002, Douglas Krupp founded Berkshire Income Realty as an affiliate of Krupp Group of Funds. The REIT focuses on the acquisition, ownership and management of multifamily properties.

Paul Krupp is identified in Berkshire Income financials as a trustee of the Douglas Krupp 1980 Family Trust, the beneficial owner of a substantial amount of Berkshire Income common stock.

Just prior to Patricia Associates' acquisition, the REIT sold one of two properties it owns in Florida. It received $35.7 million, or $125,815 a unit, on the sale of the 276-unit Windward Lake apartments in Pompano Beach.

The REIT now owns 22 apartment communities in Florida, Illinois, Maryland, Texas and Virginia. It reported $361 million in total assets for the quarter ended March 31.

- David R. Corder

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