DeLAND, FL-Spotting a potential multifamily upgrading niche 30 miles north of Downtown Orlando, BPG Properties Ltd. has acquired the 224-unit Arbors Apartments from Denver-based Aimco Arbors LLC. The $12-million acquisition price includes the pending assumption of $7.6 million of existing Housing Finance Authority of Volusia County bonds.

BPG Properties is the operating affiliate of Philadelphia-based Berwind Property Group Ltd.

Madison Apartment Group, a five-year-old BPG affiliate, is the owner of record and will operate the Arbors. BPG made the deal for its $550-million BPG Investment Partnership VII LP private equity fund. In doing the deal, Steve Pogarsky, vice president of acquisitions for Madison, says "the appeal of this acquisition was having the ability to acquire a well-maintained asset below replacement cost in a growing market."

The $12-million price equates to $53,571 per unit. Current replacement costs for comparable properties run up to $95,000 per unit, Hal Warren, senior director in the Orlando office of Cushman & Wakefield's Apartment Brokerage Services Division, tells GlobeSt.com. The 19-year-old Arbors at 129 E. Villa Capri Circle is 95% leased at average asking base rents of $800 per month.

Pogarsky says the Arbors is Madison's first acquisition in the Orlando-Daytona Beach corridor and "complements our existing Florida multifamily holdings in Fort Myers and Lakeland." The transaction continues Madison's strategy of expanding its multifamily portfolio "with value-added acquisitions in primary and secondary markets nationwide," Pogarsky says.

DeLand, a Volusia County city of 25,000 population, is about 30 miles west of Daytona Beach and 30 miles north of Downtown Orlando. "As these two cities continue to grow, DeLand is positioned to experience increased population growth, leading to increased demand for apartments," Pogarsky adds. "Our interest in acquiring strategically located assets in Florida remains strong as the state's population growth trends continue to be robust."

The Arbors was a direct deal between BPG and Aimco. The deal took 15 months to complete, from letter of intent to closing. "The [closing] process was longer than typical due to complicated bond financing that was assumed [by BPG] during the transaction," Pogarsky says.

Madison Apartment Group, formed in 2001, has increased its multifamily holdings to about 22,000 units in 22 states, according to Joseph F. Mullen, the firm's president and CEO. BPG Properties Ltd.'s portfolio consists of 20 million sf of office, retail, hotel, student housing and industrial properties, and about 22,000 apartment units in 90 US communities.