BF Group Swallows Extra Costs to Gain Condo Conversion

The complex, located on about 7.3 acres, was completed in 2001 and contains only two-bedroom, two-bath units, which average about 1,045 per sf and rent for approximately $1,000 a month. "The units are the ideal size for condo conversion," Rosendo Caveiro, director of Cushman & Wakefield's South Florida apartment brokerage operations, tells GlobeSt.com. He and Brad Capas, C&W's senior director, represented Miami-based Poinciana Developers in marketing and selling the property.

"It's a solid class A property in excellent condition," Caveiro says. "Every prospective buyer fell in love with it, and some may have stretched [to exceed the asking price]. But it had an ugly loan with rates materially above market rate, a lockout provision that precluded prepayment until May and a sizeable prepayment penalty. Since the property is to be converted to condominiums, assumption of the loan was not a viable option. Condo converters like simplicity."

Caveiro credits BF with the sophistication and resources necessary to complete this complicated transaction. "The buyer went ahead with significant non-refundable deposits very early," he says. "The deal was cut last fall, even though it couldn't be closed until now, because of the loan."

Capas says, "the obstacles that were overcome to complete this transaction serve as a testament to the desirability of Sabal Palm Manor and the strong demand for quality condo conversion opportunities in South Florida." According to a count by GlobeSt.com, this year alone BF acquired two multifamily rental properties in Fort Myers and one each in Naples, Tampa and Fort Lauderdale. Representatives of BF could not be reached by deadline.