ORLANDO-On the market for only 30 days, the 144-unit Hollowbrook Apartments and the 100-unit Maitland Oaks community are under new ownership today. Both class B properties are 99% occupied.
Bidding against five competitors, Orlando Neighborhood Improvement Corp., a nonprofit, paid Atlanta-based RHA/Affordable Housing III Inc. $12.98 million or an average $53,230 per unit for the two properties. The 37-year-old Hollowbrook is at 5465 Curry Ford Rd.; the 25-year-old Maitland Oaks is at 8339 Pembrook Villa Circle.
The properties were listed at a total $13.5 million or $55,328 per unit. The seller was asking $5.24 million or $52,400 per unit ($70.43 per sf) for Maitland Oaks, and $8.26 million or $57,400 per unit ($55.73) per sf for Hollowbrook. Hal Warren, senior director of Cushman & Wakefield of Florida's Apartment Brokerage Services division in Orlando, and Cole Whitaker, the division's executive director, brokered the transaction.
Warren tells GlobeSt.com the acquisition price was "far below replacement cost" of at least $95,000 per unit or $125 to $175 per sf. He says the deal was done at this time because "the seller just felt it was time to take advantage of attractive pricing in the Orlando market."
A governmental challenge the seller had to overcome was the properties' land use restriction status, Warren says. "The property had a LURA [land use restriction agreement] and was not a candidate for conversion" to condominium homes, the broker tells GlobeSt.com. The Orlando office of Atlanta-based Primary Capital Advisors provided acquisition financing.
The acquisition was a good deal for the buyer, Warren tells GlobeSt.com, because the two properties are "mostly in built-out submarkets with good employment drivers" and minimal competition. "Due to Florida's Concurrency legislation, escalating impact fees have increased to a current average of $9,000 per unit," the broker notes. "Presently, there are no competing multifamily developments under construction within either property's immediate neighborhood."
Warren cites additional "barriers to entry" by rival developers. "Due to the limited availability of additional multifamily development sites and strong growth factors within the immediate submarket, these properties should continue to enjoy the benefits of their locations."
He says "recent land values for multifamily [development] in Central Florida have exceeded $12,000 per unit, while the average cost for new construction in Metro Orlando exceeds $95,000 per unit."
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