Market Report

Hendricks-Berkadia Real Estate Advisors, which ranks as one of the leading multifamily investment banking and research companies in the nation, recently negotiated the sale of five Florida apartment properties for $78.5 million.

Cole Whitaker, partner who heads Hendricks-Berkadia’s southeast region based in Orlando, negotiated the sale with senior vice president in the Orlando office Hal Warren and vice president Jason T. Stanton, of the firm’s Tampa office.

The Pensacola properties include the 213-unit Cordova Regency Apartments at 4311 Bayou Blvd., 176-unit Crest View at Oakleigh Apartments at 8990 N. Davis Hwy., 200-unit Kings Mill at 8917 N. Davis Hwy., and 152-unit Crestview at Cordova at 3500 Creighton Road.

As co-producer with the National Apartment Association of Maximize: 2014 Multifamily Asset Management Conference, Lefkovits explains that — regardless of how high rents grow or how low cap rates drop — the emerging class of multifamily asset managers, pricing professionals, data analysts and operations professionals will be ultimately tasked with creating value from the estate.

Inflection Points: Record-breaking rent growth has rewarded multifamily investors across a multi-year streak since the recession ended. Veteran players know that a cyclical market is what makes arbitrage possible and that sooner or later, rents will plateau. When they do, all eyes turn on the asset manager to maintain Internal Rate of Returns (IRRs) and distributions by extracting more cash flow from the asset. When rents are white hot, operational performance is a side thought. When rents stall, the hustle is on to implement the ancillary services, revenue management, and expense reductions necessary for optimizing returns.

Cap Rates: In the time it takes a distressed asset to blink, cap rate compression is back. Not only have cap rates nose-dived across asset classes (into the fives for Class A and the sixes for Class B), compression on forward-looking rates for rehab deals is pushing prices into the asset classes ahead of them. With value-add B-class assets trading for A-class money, the task of the asset manager to create the NOI growth necessary for exits (sometimes for as short as a three year hold), becomes a balancing act of strategic cost containment and creative revenue growth.

Technology: Advances in multifamily technology have provided incredible efficiencies at the property level. Selecting which to implement (not to mention handling institutional change management) can nevertheless beguile operators, particularly when portfolios are already redlining on rents. Technology has also provided access to immense data sets for predictive analytics and business intelligence efforts. Despite the progress, there are more numbers to crunch than ever, and still no true consensus of whether or not big data can be profitably applied to the apartment industry.

The 10-year Fannie Mae loan, provided by an agency lender, features a loan-to-value ratio of 80 percent, a competitive fixed-rate of 4.69 percent and interest-only payments for a portion of the loan term. This transaction was negotiated by Meridian Capital Group Managing Director Michael Brown and Senior Underwriter Noam Kaminetzky, who are both based in the company’s Boca Raton office.

"Meridian leveraged its strong agency lender relationships to secure a mortgage at 80 percent loan-to-cost with an interest-only feature in a Fannie Mae pre-review market," said Brown.

Berkadia Apartment Real Estate Advisors, which ranks as one of the leading multi-family investment banking and research companies in the nation, recently negotiated the sale of Colonial Lane apartments and Palm Garden apartments in Daytona Beach for $2.4 million.

Cole Whitaker, partner who heads Berkadia in the Southeast, negotiated both sales with senior vice president Hal Warren and vice president Jason Stanton representing the seller, VFC Properties 9 LLC.

Hogan Assets LLC, who was represented by Lauren Nasser of Arthur Kowitz Realty, acquired both properties, which together consist of 92 units in two-story, garden-style buildings located in close proximity to the beach.

Marcus & Millichap, a leading commercial real estate investment services firm with offices throughout the United States and Canada, announced the sale of Imperial Crown Apartments, a 173-unit apartment property located in Lakeland, Fla., according to Richard D. Matricaria, regional manager of the firm’s Tampa office. The $6,850,000 sales price equates to $39,595 per unit.

Imperial Crown Apartments were built in 1975 and are located at 1013 Griffin Road in Lakeland. The property consists of two, four-story residential buildings that are comprised of 56 one-bedroom/one-bathroom units, 49 one-bedroom/one-bathroom deluxe units, 52 two-bedroom/one-bathroom units and 16 two-bedroom/two-bathroom units. Superior community amenities include two on-site laundry facilities, controlled access, fitness center, business center, clubhouse, volleyball court, shuffleboard courts, billiards room, playground and a resort-style swimming pool.

The property received significant capital improvements in 2013 that included new exterior paint, two new roofs and a repaved and restriped parking lot. Additionally, the interiors of 10 units were renovated with new vinyl tile and carpet flooring, as well as new counter tops, kitchen cabinetry and kitchen appliances.

"The buyer recognized a significant add value play in Imperial Crown Apartments, which should be expedited by the continued growth we are seeing in north Lakeland, along the I-4 corridor," Regan said.

Newport Pointe, built in 1974, is located at 4900 N. MacDill Ave. and is situated on 5.11 acres with five buildings, containing one- and two-bedroom floor plans that average $568 per month. Amenities included a playground, sports court, clubhouse, laundry facility and a swimming pool with a sun deck.

Newport Riverside, built in 1968, is located at 4111 N. Poplar Ave. and is situated on 7.48 acres with 15 buildings, containing one- and two-bedroom floor plans that average $609 per month. Amenities included a laundry facility, clubhouse, fitness center, carports and a swimming pool with a sun deck.

Berkadia’s Vice President Jason Stanton, based in Tampa, negotiated both transactions with partners Cole Whitaker and Hal Warren out of their Orlando office on behalf of the sellers.

Stanton said the new owner plans a value-add program for both of the communities to increase overall quality of the units and the communities’ curb appeal allowing for future revenue and occupancy increases.

Marcus & Millichap, a real estate investment services firm with offices throughout the United States and Canada, announced the sale of Belfair Park Townhomes Phase II, 17 pad-ready townhome lots located in the Hyde Park neighborhood of South Tampa, according to Richard D. Matricaria, regional manager of the firm’s Tampa office. The vertical-ready lots sold for $1,270,000 or $74,705 per unit.

Casey Babb, a CCIM and associate vice president investments, and Luis Baez, senior associate, both in Marcus & Millichap’s Tampa office, acted in a transaction broker capacity and put the deal together on an off-market basis.

"The original Belfair Park developer initiated construction back in 2006 and delivered 10 townhomes before being forced into a holding pattern due to the housing collapse," says Babb. "The community abuts the Crosstown Expressway in Hyde Park/Palma Ceia and today, represents one of the last large townhome development sites in that submarket, where units are again trading for as much as $500,000. As opposed to finishing the project himself, the original developer elected to sell the lots to a new developer who will finish the project and sell off the remaining units in 2016," concludes Babb.

Southeast Florida
Meridian Capital Group, LLC, a commercial real estate finance and advisory firm, negotiated a $17 million loan to refinance a mixed-use property located in Wellington, Fla., on behalf of Richard Schechter of The Bainbridge Companies and Norman Weinstein of Stateside Capital Corporation.

The eight-year loan, provided by a regional balance sheet lender, features a competitive fixed-rate of 4.13 percent and one year of interest-only payments. This transaction was negotiated by Meridian Capital Group Managing Director Michael Brown and Originator Jared Hill, who are both based in the company’s Boca Raton office.

Wellington Plaza is a two-story retail and office property, totaling 155,000 square feet, located at 12765 Forest Hill Boulevard in Wellington. Notable tenants include Starbucks and the U.S. Army Core of Engineers.

"Meridian leveraged our relationship with the lender to obtain a non-recourse loan with the characteristics of a balance sheet mortgage as well as a rate and term similar to a CMBS or life insurance company loan," said Brown.

Capital One Specialty Healthcare Real Estate, part of Capital One Bank’s Commercial Real Estate Group, announced that it has provided a $14.6 million HUD 232/223(f) loan to refinance Tequesta Terrace, a 100-bed assisted living facility in Tequesta, Fla. The transaction was originated by Carolyn Whatley, Senior Vice President of originations, headquartered in the company’s Palm Beach office. Tequesta Terrace is owned by Terrace Communities, which also owns assisted living communities in Vermont, New Hampshire, Maine and Florida.

"At Capital One, we first develop an insightful understanding of our borrowers’ business objectives and goals for their properties," Whatley says. "We then develop financing alternatives that meet their requirements in different ways. Whenever possible, we want to offer alternatives." In this case, Whatley and her team presented the borrowers with various structures. After weighing the options, the partners chose HUD’s refinance program because it fits well with their strategy as long-term holders of the property. At the same time, the loan is assumable and can be prepaid, so it provides flexibility in the event their goals change.

"We are a Fannie Mae DUS® lender, a Freddie Mac Program Plus® lender and a MAP- and LEAN-approved HUD lender," Whatley adds. "These programs, together with the bank products, make it possible for us to offer clients a broad array of alternatives." The transaction was financed under the HUD 232/223(f) program and was underwritten under the LEAN process.

In addition to Tequesta Terrace, Capital One Multifamily is refinancing two other properties owned by Terrace Communities, both located in New Hampshire. Kate Heaton, a partner of Tequesta Terrace, praised the group for the ease with which they handled all three transactions simultaneously. "The members of the Capital One team are consummate professionals, responsive and always accessible. During the process, it seemed as though they are always working at most any time, day or night," she says. "At every turn, they went the extra mile to ensure our requests were met, providing for a most positive experience."

Tequesta Terrace was built in 2001. It has 71 assisted living units with six different floor plans, from luxury studios to two-bedroom units. All units have kitchenettes, individually controlled heating and air conditioning, and carpet and vinyl flooring. Some apartments have private patios. The memory care unit has 29 beds, with both private and semi-private suites available. "The property portrays the perfect balance of elegance and comfort," Whatley said.