(Crystal Proenza is associate editor of Real Estate Florida.)
BOCA RATON, FL-There's much talk of investors looking to buy distressed properties in South Florida, but there is a noticeable absence of deals actually taking place. Laramar Group, a Chicago-based real estate investment and management company, has officially acquired a distressed property, Oceanview Apartments, in a deal that has been in the works for about six months.
The company has been managing the property for that amount of time, after it was appointed as receiver during a foreclosure process. The sale of the property--bordered by the Intracoastal Waterway and the Atlanta Ocean, located two miles from Downtown Boca Raton--was brokered by Apartment Realty Advisors.
The 160-unit development, originally built in 1967, was purchased in April 2006 by an entity named NRW Development with the intent of converting the units into condos, explains Ron Roan, head of Laramar's Florida office and vp of acquisitions. That project failed after several contracts were out and no units closed. Laramar worked with the property's senior lender, then negotiated with the mezzanine lender and owner to complete an "amicable foreclosure process," according to a release.
"It was a multi faceted deal," says Keith Harris, EVP of investments for Laramar. "Various parties were paid. If you work in the value add component, you can value it in the mid to high 200s for all of the investment per unit. The opportunity with this transaction is it has a value-add play to it in terms of physical repositioning and also we brought our financing expertise to the table and were able to negotiate with lender, mezzanine lender and borrower to create value for our investors by putting back together something that was broken."
The two mid-rise buildings will be re-named Villa Oceana Apartments, with renovations beginning immediately and occupancy planned for next year. The company's target rents include premiums for water views and range from $1,500 up to $3,000 per month. Upgrades will be made to unit interiors including new appliances, lighting and carpets. New amenities are planned including a business center, Internet Café, upgraded workout facilities and pool. Exterior improvement plans include a new monument sign, painting and landscaping.
The property's unique position on the waterfront in the Boca area is what drew Laramar to the project, says Roan, adding that the company has the capital and experience to purchase a distressed property when it finds opportunity. "There's a lot of funds out there purporting to have capital to do these kinds of deals, but we're not seeing a lot of them get done. We're spending most of our time looking for assets in the tri-county area, but also continue to monitor the major markets, including Orlando, Tampa/St. Petersburg and even Jacksonville," he adds.
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