Panama City Complex Changes Hands in Pre-COVID Deal

PANAMA CITY, FL-Preferred Apartment Communities, has acquired a 288-unit apartment complex here for an undisclosed amount.

Parkside at the Beach, a Class A multifamily community, was built in 2019 and is the latest addition for Preferred Apartment Communities, which is based in Atlanta. The publicly traded company has been building out its portfolio of apartment properties across the Sunbelt and owned or invested in 123 as of the end of 2019.

The company did not respond to queries about the purchase price or the identity of the seller. Jeff Sherman, president of multifamily at the company, said Preferred Apartment Communities identified the complex as an acquisition target in late 2019, before the COVID-19 outbreak in the US. It also paid non-refundable earnest money before the coronavirus hit and in February secured an “extremely favorable” first loan from Freddie Mac.

According to the company, that loan has a fixed rate of 2.95% over 10 years. The loan is interest-only for the first two years, and amortizes based on a 30-year schedule. While the coronavirus has upended the real estate business, Preferred Apartment Communities said its April rent collections were strong, which bolstered its decision to move forward with the purchase of Parkside at the Beach.

“Despite the COVID-19 pandemic, which has rapidly impacted all markets, we were able to close on terms previously agreed to with Freddie Mac,” said John Isakson, chief financial officer at Preferred Apartment Communities. “This favorable debt complements this acquisition, providing for enhanced cash flows and projected returns.”

Parkside at the Beach fronts a major highway and is less than three miles from a large, open-air shopping mall. It features a number of amenities, including a pool, fitness center, clubhouse and sundeck. Despite the name, the complex is located several blocks from Panama City’s famed beach.