Palm Lake Yields $15M in HAP Deal

MIAMI–Palm Lake Apartments, a 300-unit, 211,500-square foot multifamily property, sold for $15 million. The sales price represents $50,000 per unit, or $71 per square foot.

Marcus & Millichap Real Estate Investment Services’ Senior Vice Presidents of Investments Still Hunter III and Evan Kristol represented the seller, an entity controlled by The Related Group. Hunter and Kristol also represented the San Francisco-based buyer, The Reliant Group.

Located at the corner of NW 27th Avenue and NW 115th Street in unincorporated Miami-Dade County, Related owned the property for more than 20 years. Kristol tells GlobeSt.com that the property was in maturity default and Related was working to either refinance or sell the property, with a preference for exiting.

“It’s rare to have a 300-unit, class C bread and butter deal even trade in this market," Kristol says. “Related didn’t want Palm Lake out on the market because they were concerned that lenders wouldn’t be motivated to put debt on it. The opportunity only went to a limited buyer pool. We found the right buyer.”

Related had a housing assistance payment (HAP) contract with the U.S. Housing and Urban Development (HUD) Program for elderly and disabled housing. The contract created significant value in the market because there are few remaining HAP contracts, and even fewer on larger assets in South Florida, Kristol says. Darron Kattan, a partner and senior multifamily broker in the Tampa office of Franklin Street's Real Estate Services division, agrees.

“The project-based contracts are unique because HUD hasn’t been giving out any new ones in a long time, and I don’t expect them to in the near future,” Kattan tells GlobeSt.com. “Some owners lose their contract on the property because they don’t maintain it to HUD standards. These contracts are diminishing in number and therefore becoming more valuable.”

Built in 1967, Palm Lake Apartments offers 220 one-bedroom/one-bath units, 40 two-bedroom/one-bath units and 40 two-bedroom/two-bath units. The community has a gated entrance on the heavily-trafficked NW 27th Avenue. The north campus of Miami Dade College is directly across the street from the property and the 180-acre, 18-hole Westview Country Club golf course borders the property to the east. The property is nearly 100% occupied.