(Mark Your Calendars: RealShare Apartments 2011, October 20 in Los Angeles).
TAMPA, FL-Puritan Place Apartments has traded for $4.06 million. The sale price for the 232-unit property totals $17,500 per unit and $20.07 per square foot.
Franklin Street managing directors Darron Kattan and Bob Goldfinger, along with director Kevin Kelleher represented both parties in the transaction. The foreclosed property was a lender-owned asset and the buyer is a private company based out of Louisiana. The purchase of Puritan Place Apartments marks the buyer’s fourth acquisition in Central Florida.
“I sold the property the two previous sales to this sale, giving me unique and interesting perspective on this asset and its journey through the real estate cycle,” Kattan tells GlobeSt.com. “The debt the buyer got is significant as this deal likely couldn’t get any debt a year ago. Selling C class real estate still is very different and taking a different path versus the nicer A and B class properties, where values are/have escalated significantly.”
Built in 1970, Puritan Place Apartments is built of wood frame on 11.5 acres. The unit mix consists of eight efficiencies, 120 one-bedroom, 64 two-bedroom, 16 two-bedroom townhouses, and 24 three-bedroom apartments. The buyer received debt from a lender he has an established relationship with and will begin renovating and repositioning the property immediately.
“The property had significant physical and operational issues, as we often see with foreclosed multi-family properties in lower income areas,” Kattan says. “It’s a great value versus replacement cost and the buyer is confident on the recovery and future of Central Florida. He is currently under contract on two more properties and seems eager to do even more after that.”
Recent improvements in tenant demand have set the Tampa apartment market on the path to recovery, and a significant decline in vacancy remains on track for 2011, according to Marcus & Millichap. Continuing a trend that started in late 2010, though, demand will shift to class B/C units due to job growth in sectors such as trade, and leisure and hospitality.
With the recovery under way in the class B/C segment and owners increasingly able to withdraw concessions, cap rates for this product type could compress from their current range of around 8%, M&M reports. Interest in lower-grade properties recovered over the past six months, and first-year returns of about 10% remain attractive.