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For the first time in the past five years, all five of the largest commercial real estate transactions in the Tampa Bay area over the past 12 months involved multifamily housing.
Unlike previous years, when lodging, office and industrial project sales topped the market, multifamily rental deals reigned in 2020, taking four of the top five slots. The only non-apartment transaction to make the list involved a collection of senior living facilities.
Despite fears that rent collections would sag amid the COVID-19 pandemic, investors elected to park capital in apartment projects seen as a good hedge against potential inflation and a source of positive yield and appreciation. Multifamily projects, too, are traditionally viewed as safe haven investments because downside risk is spread thinly.
The Tampa Bay area’s multifamily sector, in particular, has performed especially well in the past year as a result of in-migration from Northeastern states, where higher taxes, colder weather and the pandemic combined to drive new residents to the Gulf Coast.
At the same time, Tampa Bay employment has outpaced that of the nation, pushing a need for increases residences amid a historically low supply of single-family homes.
Combined, the five largest deals of the year generated transactional volume of $544.05 million, according to property records from Hillsborough, Pinellas, Pasco and Polk counties.
In a nod to the impact the coronavirus had on the area in 2020, however, total deal volume for the top five transactions was off by 35%, or nearly $300 million from a year ago.
1). Welltower Inc. senior housing portfolio: $125.1 million
Boca Raton-base Kayne Anderson Real Estate Advisors LLC has long invested in senior housing in Florida, but in mid-2020 the company further cemented its grip on the sector with the acquisition of several Tampa Bay-area properties.
The company bought four senior housing projects from Ohio-based Welltower Inc. amid the COVID-19 pandemic, in Tampa, Ruskin and Sun City Center, records show.
The purchases also were part of a larger portfolio deal with Welltower that spanned Southwest Florida and Sarasota-Manatee submarkets, occurring from April through June.
Each of the properties carried the Aston Gardens of Discovery Village flags; many included both independent and assisted living services, records show.
In buying the 11702 Lake Aston Court, in Tampa; 231 Courtyard Blvd. in Ruskin; 1311 Aston Gardens Court in Sun City Center; and the Discovery Village at Westchase at 11330 Countryway Blvd., also in Tampa, Kayne Anderson was taking advantage of pandemic-fueled declines in occupancies and spikes in operating costs.
In the case of Welltower, Kayne Anderson acquired the properties at a roughly 18% discount to the amount Welltower paid in late 2015.
“Kayne’s investment philosophy is to pursue niches, with an emphasis on cash flow, where our knowledge and sourcing advantages enable us to deliver above average, risk-adjusted investment returns,” the firm notes on its website.
2). Nine15 Apartments: $120 million
Blaze Partners LLC made a big splash in the Tampa market in 2020 with the acquisition of the Nine15 apartments for $120 million.
The late February deal for the 23-story urban tower marked the Charleston, S.C.-based company’s first in the region and the third-largest multifamily rental sale in Tampa history on a per-door basis. Only the 2019 sale of the Icon Harbour Island and the Camden Pier District apartments in St. Petersburg traded at higher rates.
The 362-unit tower, named after its address at 915 N. Franklin St. in downtown Tampa, was completed in late 2017 by Atlanta-based development firm Carter.
“This transaction marks a continuation of our strategy focused on acquiring recently developed, Class A communities in dynamic submarkets within the premier growth markets throughout the Sun Belt,” says Chris Riley, who founded Blaze with partner Eddy O’Brien and is a firm managing partner, in a statement.
“We are actively building our pipeline and continue to have a healthy capital appetite for the right opportunities.”
3). Trellis at the Lakes: $114 million
St. Petersburg-based Stoneweg US had primarily focused on acquiring smaller, less capital intensive apartment properties in the five years since it was formed as a U.S. manager under contract to a Swiss investment firm.
But in November, the company broke with that tradition when it bought the Trellis at the Lakes complex in its home city for $114 million, in conjunction with Hartford Investment Management Co., a subsidiary of the Hartford Financial Services Group.
The 688-unit complex, on nearly 60 acres, represents the company’s largest single asset transaction to date. In all, Stoneweg US owns some 60 multifamily rental projects with more than 13,000 units.
Stoneweg US and Hartford Investment acquired the 11401 Martin Luther King Jr. community from a joint venture that had owned it since 2016.
Trellis at the Lakes was completed in 1982; unit sizes average 732 square feet.
Stoneweg US intends to invest roughly $7 million into the project to complete unit renovations and upgrades the former owner began, repurpose some outdoor amenities to more modern uses and upgrade other amenities.
“We want to make this a community where people will live, play and have their friends over — a real destination,” says Stoneweg US CEO Patrick Richard.
4). Bainbridge Bayside Apartments: $104.2 million
Atlanta-based Cortland Partners LLC bought the recently completed Bayside apartments in Clearwater from developer Bainbridge Cos. during the final quarter of 2020.
The four-story complex, at 19337 U.S. Highway 19 North, marked Cortland’s return to the Tampa market. The company owns six communities in Tampa Bay, including Bowery Bayside, Cortland Brighton Bay, Cortland Westshore and Cortland Bayport, but its most recent acquisition occurred in 2015.
The renamed Cortland Bayside, with 361 units, features waterfront views and amenities such as a resort-style swimming pool, a fitness center, yoga and spin studio and a bark park or dogs. Rental rates range rom $1,425 monthly to $2,960 monthly.
Formed in 2005, Cortland is among the largest multifamily rental owners in the U.S. with a portfolio of nearly 61,000 units.
The Clearwater complex marked the second major disposition by Wellington-based Bainbridge in the Tampa area in the past year. In January, the developer parted with a 351-unit community it completed in 2019 in the Westshore Marina District.
As was the case with Courtland Bayside, Bainbridge began developing the Westshore Marina project, which was acquired by Toronto-based Starlight Investments for $100 million, in 2017.
5). Veranda at Westchase/Viera Bayside apartments: $101.25 million
Bridge Investment Group has a long history of Florida investments, and in June the Salt Lake City-based firm added to its multifamily rental portfolio here with a pair of assets in Tampa and St. Petersburg.
Together, Veranda at Westchase in Tampa and Viera Bayside, in St. Petersburg, contain 598 units.
Bridge Investment bought both properties from Colorado-based Forum Investment Group, which had owned them since March 2015.
The three-story Veranda at Westchase was completed in 1999. Viera Bayside was completed in 1986 and fully renovated in 2012.
Bridge Investment is expected to modernize outdoor amenities, enhance landscaping and upgrade unit interiors at the two complexes.
In all, Bridge Investment, which recently bought the 13-story Tampa Commons office building for $56.5 million, has more than $20 billion in assets under management.
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