WINTER PARK, FL-CB Richard Ellis Capital Markets has arranged $30.7 million in acquisition financing for Sun Key Apartments. The 10-year loan offered 30-year amortization with one year of interest only, a 71% loan-to-purchase price and a “favorable” fixed rate, Charles Foschini, vice chairman of CBRE’s Debt & Equity Finance and Institutional Group, tells GlobeSt.com.
Foschini worked with CBRE team members Christian Lee and Christopher Apone to arrange the financing through Freddie Mac. CBRE's Investment Properties and Institutional Group listed and sold the asset to Greenwhich, CN-based VIII Sun Key Apartments LLC, an entity with ties to Starwood Capital Group.
The seller was Tallahassee-based HC Florida Sun Key LLC, an entity with the Board of Administration as a managing member, according to state records. The sales price was $44.2 million, or about $74,077 per door. That makes it the largest multifamily acquisition in the Orlando market this year.
“One of the most unusual things about the property is that it had a very high student population on first blush,” Foschini says. “That could ordinarily dramatically change the underwriting of the property. In this specific case, working together with the buyer and Freddie Mac, the lender ultimately realized that the ‘students’ were really highly educated professionals not unlike a med student or a law student.”
Sun Key Apartments is a multi-family community with 596 units. Most of the students attend Full Sail University, an entertainment, media and arts industry school. Foschini says as long as there is a flow of capital at a reasonable level into the market, transactions like Sun Key Apartments will result.
“Freddie Mac has proven to be a cautious but well reasoned lender,” Foschini says. “Freddie Mac has the ability and desire to fund when there is a strong project with a strong borrower and an educated seller/servicer that can confirm all the significant market drivers to make a loan at the size and level that was contemplated and closed here.”
Orlando’s apartment sector turned the corner in the first half of the year, according to Marcus & Millichap’s third quarter report. Vacancies declined as foreclosed homeowners turned to the rental market. This is driving not only new investments, but speculation about new construction in the Orlando region. The planning pipeline has declined to 7,300 units in 2010.
“Multifamily is a healthy sector. There’s a lot of liquidity and a lot of capital in the multifamily market,” Pryse Elam, southeast regional director for New Boston Fund, tells GlobeSt.com. “We are actually seeing packages from developers looking for capital to build new apartment complexes. Some of them actually make sense. That is a pretty amazing turnaround.”
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