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ORLANDO-After owning two trophy apartment assets here for two years, an investment fund advised by Hartford, CT-based UBS Realty Investors LLC has sold the portfolio consisting of a total 1,042 units to the Zohouri Group of Atlanta for $188.1 million or $180,518 per unit. It was the largest multifamily transaction of its kind in Central Florida this year, based on the aggregate portfolio price, according to GlobeSt.com research.

The UBS fund disposed of the apartments because of "the attractive pricing paid by condo converters today versus an income buyer's valuation," Greg Engler, president of Alpharetta, GA-based Engler Financial Group LLC, tells GlobeSt.com. Engler negotiated for the UBS fund. Zohouri represented itself.

In October, Engler Financial represented GDC Properties Inc. of Hawthorne, NY in the $84-million sale of the 209-unit Mirasol apartments in suburban Celebration to New York-based Lexin Capital That deal set a multifamily sales record in metro Orlando with a per-unit price of $401,904, as GlobeSt.com reported Nov. 4.

Engler says the UBS properties were on the market for three months. The deal took six months to complete, from contract signing to closing. The broker says the estimated occupancy at each property at closing was 92%. He tells GlobeSt.com he doesn't think the condo conversion bubble will burst anytime soon.

"Condo conversion interest [in metro Orlando] has not declined, but lenders' underwriting and terms are getting more conservative," Engler tells GlobeSt.com. "This will slow the pace of acquisitions of existing apartments by converters somewhat in 2006, as fewer converters will be able to 'digest' lenders' more conservative deal terms." He says "those converters who are willing to meet the lenders' requirements, such as strong balance sheets and are willing to put up the required equity, will be able to acquire conversion candidates in 2006."

Engler points out that "given the increase in acquisitions of existing apartments by condo converters, the number of class A product available for converters to purchase has decreased dramatically." He says "there now has become a scarcity of class A apartments available for converters to buy in Orlando."

Still, the mortgage banker says, Orlando "continues to impress the rest of the country with the median sales price of an existing single-family home increasing to $255,100 in October, an increase of 46% over the $175,000 median home price recorded during the same time a year ago, based on information provided by the Florida Association of Realtors." Additionally, October's sales pace was up 9% over a year ago, despite mortgage rates that increased to an average of 6.07%," Engler says.

He tells GlobeSt.com the two UBS properties are "unique because they achieve some of the highest rents [in metro Orlando] and offer some of the highest level of improvements in their respective submarkets." He says "they should do well as conversions due to these and other competitive advantages."

Rent for Alexan's smallest one-bedroom unit starts at $850 per month and goes to $1,700 per month for the largest four-bedroom townhomes. The average monthly rent is about $1,200. At Towne Place, the smallest one-bedroom starts at $815 per month and goes to $1,600 per month for the largest three-bedroom loft. The average rent is $1,070 per month.

UBS purchased the three-year-old Alexan Club at 2450 Lake Debra Dr. in 2002 and the six-year-old Towne Place at 133300 Colony Square Drive in April 2004.

Zohouri funded the UBS acquisitions from financing provided by Lehman Brothers Holdings Inc. of New York and Atlanta-based Westplan Investors. Inc. George Smith Partners Inc., a Los Angeles-based mortgage broker firm, sourced the loans for Zohouri.

Instant Insights /

GlobeSt.com EXCLUSIVE: UBS Fund Flips 1,042 Apartments for $188M

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