REO Multifamily Asset Trades After Four-Year Challenge

(Save the date: RealShare Apartments comes to the Westin Bonaventure, Los Angeles, October 24.)

TAMPA—In a deal with plenty of twists and turns, Brookside Apartments has finally sold for $6.5 million in an REO deal. That translates to $18,362 per unit and $20.33 per square foot.

Darron Kattan, Robert Goldfinger, and Kevin Kelleher, all of Franklin Street, represented both parties in the transaction. Both the seller and the buyer were private local investors.

The short sale of Brookside was a bankruptcy process that began four years ago—and there were plenty of challenges. The physical condition of the multifamily asset was poor because the owner ran out of operating funds long ago.

“The challenges were overcome by finding the right buyer who understood the property issues going in and had the ability and experience to get the deal to a closing table,” Kattan tells GlobeST.com. “We could have found buyers that would say that they would pay more money, but if we chose one of them, the deal would have unraveled when it got further along. By gathering all the info and presenting it correctly, thoroughly and accurately, the buyer was not surprised by the challenges and factored them all into their offer price.”

Built in 1972, Brookside is located at 5008 Sierra Place, Tampa, FL. Brookside is a 354-unit multifamily community located in the Temple Terrace submarket of Tampa. Located less than two miles from the University of South Florida and Busch Gardens, the property sits on 14.6 acres and offers 42 two- and three-story buildings.

Kattan characterizes the multifamily deal as a strong value-add. By renovating and repositioning the multifamily property, coupled with improving market fundamentals, he says, the investor will be able to increase NOI in the short-run and capital appreciation in the long-run.

“Replacement cost on this property would probably be in the neighborhood of $75,000 to $90,000 per unit,” Kattan says. “One of the factors that makes existing multifamily so attractive to buy is that you can often buy it for a cost that is well below the replacement cost of the same property. That being said, with the location of this property and the rents that you can achieve in it, a developer wouldn’t build in this location as it wouldn’t make economic sense.”