TAMPA, FL-A quartet of distressed multifamily communities has traded for a meager $1.4 million. The sales price equals $13,207 per door—or $22.51 per square foot.
Franklin Street’s Kevin Kelleher, Bob Goldfinger and Darron Kattan represented both the buyer and the seller in the REO transaction. The seller was an unnamed lender that foreclosed on the property in June 2011. The buyer is a Tampa-area private investment group.
“For C class product in Tampa, this was fair market value,” Kelleher tells GlobeSt.com. “The replacement costs on the properties would have been $65 to $70 a foot. This portfolio of smaller multifamily properties was highly distressed at the time of sale.”
How distressed? The economic occupancy had settled at about 50%, much lower than the desired standard of 95% in a healthy multifamily asset. Still, the properties found a willing investor, in part, because of the strategic location in Northeast Tampa submarket.
Built in 1969-1973, these properties—which include Bent Tree, Villa Seville, Towering Pines, Holly Court and Julie Court—offer tenants easy access to I-275 and I-75. The University of South Florida, the second largest in Florida, is in the neighborhood.
Kelleher says all five buildings demand a capital expenditure from the buyer—but the investor is experienced in turning around distressed apartments in low income areas and plans immediate renovations to stabilize the properties. Kelleher is betting the buyer will fare well. He notes that buyers who previously bought distressed deals and stabilized them have begun to realize the coveted value-add opportunity.
“We expect distressed multifamily to diminish as most of the REO supply has been worked through,” Kelleher says. “That said, we do not expect transactions to diminish as operations continue to stabilize or improve and financing becomes more fluid in the marketplace. Demand will continue to outweigh supply in 2012 for market priced distressed and non-distressed multifamily units in Florida.”
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