Distressed Multifamily Opportunities Dwindling in Tampa Bay

TAMPA, FL—J&K Apartments just traded for $300,000—and it may be one of the last distressed multifamily deals of its kind to trade in the Tampa Bay area. The sale price equals $13,636 per unit and $17.25 per square foot.

Kevin Kelleher, Darron Kattan, and Robert Goldfinger, all of Franklin Street, represented both parties in the transaction. The property was an REO sale. A national bank foreclosed on the property and sold it to a private local investor.

In 2012, Franklin Street closed 22 multifamily transactions. Seventy percent of those were lender distressed or REO properties. Kelleher tells GlobeSt.com he expects continued stabilization of multifamily properties in the Tampa Bay marketplace.

“This will allow the purchasers of the REO properties to obtain debt for these mostly all-cash transactions, or sell,” Kelleher says. “The stabilization and ability to put debt on the properties will increase the buyer pool and pricing.”

Kelleher expects distressed multifamily deals to account for 25 percent or less of his business in 2013—and he thinks that’s a standard figure across the board for the multifamily industry in Tampa. He figures a large majority of the remaining distress is in the class B and C world.

J&K Apartments is a prime example. Built in 1965, J&K Apartments is located at 2004 E. 140th Avenue. The multifamily property includes the original 1965 building and three buildings constructed in 1986. The advantage is its location near I-75, I-275, and the University of South Florida.

“J&K Apartments is a classic value-add investment for this buyer,” Kelleher says. “There is rent upside potential as overall market vacancy rates continue to decrease. As demand for apartments continues to rise, there will be an increase in occupancy which will allow this investor to increase rents leading to an increase in Net Operating Income.”