Excelsa Eyes Florida Apartments After Inactivity

After remaining quiet for a few years, Excelsa Properties has been looking to get back into the multifamily acquisition game and is focusing on the Sunshine State, even as uncertainties remain market.

In fact, the real estate manager recently announced it purchased The Drake at St Pete and plans to pour $8 million into capital improvements. The addition of the 477-unit property in St Petersburg, Florida marks the 19th multifamily acquisition to the company’s portfolio.

The move comes after Excelsa made just four acquisitions from 2021 to 2023. In the first half of this year, it has already bought two properties including The Drake at St Pete, and has underwritten roughly 500 deals, according to David Fletcher, managing director at Excelsa.

He told GlobeSt that the company “would have liked to buy more” during the few years it was inactive but high insurance rates spooked its appetite.

However, Fletcher said that the firm is  “hungry” now to make more additions, particularly in Tampa Bay and the Florida area. Excelsa is focused on Tampa Bay, Sarasota, and Fort Myers, currently.

While rates have not come down now, they have “flattened, according to Fletcher. In the market, currently, the managing director noted that high supply is starting to slow down, with new projects starting and continuing from about 18 to 20 months ago.

“In Tampa, in Pinellas County, we didn’t identify anything that was coming out of the ground now. So, there might be some future things that would affect our property, but not nothing today,” said Fletcher.

But he did add that the same does not apply to other parts of Tampa Bay, Orlando, and Jacksonville — just to name a few.

“We’ve been quite selective in how we’re dealing, how we’re reacting to the amount of supply in the market today.

Particularly, Excelsa likes where its The Drake at St Pete property is positioned.

There’s “a lot of traffic into downtown St. Pete and right onto the bridges to go into Tampa,” Fletcher said.

“The property I think is positioned to benefit more by the attention of new supply coming into the market than to be hurt by it just because if somebody’s going to build something there it’ll probably end up leasing on a gross rent basis of more than $500 per month higher.”

While the real estate firm is focused mainly on Florida, it does have properties in other states including Colorado and North Carolina. The multifamily market outside of Florida just isn’t favorable enough for Excelsa to actively explore.

“In Denver,  we saw property in Central Park area near the airport that was dealing with three months of trade-off,” Fletcher said.

“I mean, I think that was the highest that we saw but that has left the market.”

Fletcher did add that some areas have stabilized. For example, Excelsa’s Ford Mill property in the suburb of Charlotte hasn’t been impacted by high supply.

When considering acquisitions, Excelsa takes a few things into account. One of them is looking for a vintage property, as the recent The Drake at St Pete acquisition was built in 1972.

“We’re looking for situations where we think there is gonna be less competition because the properties are older but also have very attractive locations by Pinellas County that are in pockets where you don’t have this soup phenomenon,” Fletcher said.

“Where every property on the block is a multifamily and it’s very hard to differentiate one from another or where a property owner may be undercapitalized or is having to pay more debt service than planned.”

It also takes the neighborhood into account, which includes the demographic makeup and ensuring that the area is safe with low crime. Plus, Excelsa makes sure there are no direct competitors near the property it wants to purchase.