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July 29, 2010 |
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| December 18, 2009 |
By: Eric Kalis |
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pair of local investors who say apartment prices have likely hit bottom have purchased two rental complexes from motivated institutional sellers in deals totaling $37 million.
Aventura-based Advenir made its second major apartment property acquisition since July with the $17.6 million purchase of the Lakes of Margate Apartments on Tuesday, according to Broward County records. Broward recorded the transaction on Wednesday.
Lakes of Margate Apartments Investors LLC, the seller of Lakes of Margate, is controlled by Trumbell Property Fund, a fund managed by UBS Realty Investors of Hartford, Conn. UBS Realty is the real-estate arm of Swiss banking giant UBS.
UBS Realty executive director Jayne Brundage did not return calls seeking comment.
An Aventura company operating as Banyan Lake Investors took title on Dec. 11 to a 288-unit apartment complex in Boynton Beach through an $18.8 million loan assumption, according to Palm Beach County property records.
The deal was recorded on Wednesday.
Banyan Lake assumed the loan, obtained from Red Mortgage Capital, from an affiliate of Chicago real-estate investment trust Equity Residential, which paid $19.21 million for the 21.37-acre complex in June 2000.
The purchase of the 280-unit Lakes of Margate complex at 5750 Lakeside Drive is Advenir’s second rental apartment investment in South Florida in the past five months. Advenir paid $12.58 million for a 206-unit complex in north Miami-Dade County in July.
Operating in the region since 1996, Advenir owns and operates a portfolio of apartment properties in Florida, Texas and North Carolina totaling about $350 million, according to the company’s Web site. Advenir, which also owns Advenir Station at Springdale in Palm Springs and Sundance at Plantation, was very active in buying South Florida communities earlier in the decade but had not made any significant acquisitions since 2004.
“Advenir has made a substantive return to South Florida after moving its focus to other parts of the country in the last several years,” said Charles Foschini, vice chairman of CB Richard Ellis’ debt and equity finance and institutional group. Foschini represented Advenir in obtaining $12.56 million in financing from CBRE Capital Markets, a Freddie Mac affiliate, for the Margate purchase.
Government-backed lenders like Freddie Mac, despite getting hit hard by the residential downturn, are willing to finance multifamily investments in South Florida, said Peter Mekras, vice president of Continental Real Estate Companies in Coral Gables. Mekras was not involved in either of the recent deals.
While most of the apartment properties being sold are older, institutional owners are known to keep the communities in top condition, Mekras said.
“The debt criteria has become more stringent as the year evolved,” he said. “These deals are not likely some value-add situation where there was major deferred maintenance. These institutions maintain the properties very well.”
The complex, built in 1988, is 95 percent occupied and was well-maintained by UBS, said Advenir president Stephen Vecchitto. The company plans to upgrade the clubhouse and fitness center, and build a new business center.
“As an institutionally owned property, UBS kept it in excellent shape,” Vecchitto said. “
We are excited to have added it to our portfolio and to be back in our home base, finding properties with great value.”
Advenir has a goal to buy as many as four apartment complexes in South Florida in 2010, Vecchitto said.
“We believe there are opportunities and that some sellers — not all sellers — have realized what the true market value is,” he said.
Equity also pumped money during the past 10 years into maintaining Banyan Lake, which was built in 1985, said Equity first vice president Matt Wakenight. The company spent much of 2006 and 2007 rehabilitating the 1561 Stonehaven Drive complex after Hurricane Wilma caused significant damage in the fall of 2005.
The decision to unload Banyan Lake is not an indictment against the complex or the South Florida rental market, Wakenight said. The REIT generally holds onto apartment properties for about 10 years before selling them.
Equity acquired Banyan Lake through a joint venture, said Wakenight, who declined to disclose the company’s partner in the deal. “A 10-year life [of ownership] is our normal course,” he said. “South Florida will be fine, and multifamily is a good place to be in.”
Banyan Lake is an affiliate of Aventura-based Acumen Real Estate Advisors, which launched the company this month to focus on commercial real-estate acquisitions, said Carlos Berner, Acumen’s managing director. Berner previously worked for Aztec Group and JBM Realty Advisors.
The Boynton Beach complex is Acumen’s first South Florida purchase but won’t be its last, Berner said.
“We see a positive outlook for multifamily properties in South Florida over the next few years,” he said. “We are comfortable making investments and are working on a couple more.”
Local companies like Advenir and Banyan Lake are taking a long-term approach to rental-apartment investment, said Zachary Sackley, an associate in CB Richard Ellis’ investment properties multi-housing group.
Sackley and CB Richard Ellis executive vice president of investment properties Robert Given represented Equity in the Banyan Lake sale.
“Buyers are seeing opportunities to get into the market at pricing that makes sense,” Sackley said. “Rents have declined in the last year to 18 months. If we are not at the bottom now, we are pretty close to the bottom. By jumping in now [investors] will ride the wave back up as the market recovers.”
But institutional owners, who initiated many of the apartment-complex sales this year, will likely pull back from selling properties in 2010, Sackley said.
“The main sellers this year were institutions, with a lot of them either wanting to buy back stock or pay down debt,” he said.
“Going forward, you will see a lot of C-class assets sold, while these two properties were more of B-class properties. You won’t see too many institutions bringing those deals to the market.”
Eric Kalis can be reached at (305) 347-6651.
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