Autumn Chase Apartments Sold for $6.5M

Wisco LLC, a locally based owner/operator of multifamily properties, paid Davna Investment Ltd. Corp. of Canada $28,017 per unit for the 80%-leased asset at 2200 Gladys St. in Pinellas County. Autumn Chase comprises 24 efficiencies, 116 one-bedroom and 92 two-bedroom apartments that rent from $449 to $633 a month.

The deal closed in a record 62 days, underscoring the demand for quality product in the area, Pat Duffy, president, Colliers Arnold Commercial Real Estate Services Inc. of Clearwater, FL, tells GlobeSt.com. Colliers senior investment specialist John W. Stone and associate Jason T. Stanton put the deal together and negotiated for the seller.

"This is by far the strongest seller's market we have seen in years," Stone tells GlobeSt.com. "With a careful approach to marketing, we can generate a waiting list of buyers for available debt-worthy properties."

Stone says insurance "may be the biggest wild card" in the investment market today. "We have seen rates increase approximately 260% in premiums quoted during the past 12 months." Stone says the average insurance on a per-unit basis is about $343 per unit.

"It could be considerably higher if the property was located in a coastal county and near the water," the broker tells GlobeSt.com. "This tremendous rise in costs is having a very negative impact on the market value of property."

Another change in the multifamily investment sector is the source of funding. "We are seeing the market dominated by private equity, which is very aggressive as it relates to cap rates compared to just a year ago," Stone says. "In general, a good rule of thumb is, if it was a 9 cap in 2001, it dropped to an 8 cap in 2002." He says low interest rates are "the dominating cause of the drop."

The multifamily market is also seeing a change in vacancy factors. "Real economic vacancy (today) has been higher than historic norms due to the general economic conditions (stock market, 9-11, recession, unemployment), along with the robust single family residential market pulling out an estimated 3% to 5% of tenants that have turned into home owners because of the very low (interest) rates," Stone tells GlobeSt.com.

Still, the broker says, he expects to see "a little better year than 2002 because sellers will be forced to accept prices more in line with the market factors."