Big Rental Complex on Block in South Florida
A partnership between California State Teachers and Heitman has launched the largest offering of a stabilized apartment property in South Florida since the market tanked in 2007.
The 1,520-unit complex, in Pembroke Pines, is expected to attract bids of about $200 million, or $131,000/unit. That would translate into a capitalization rate of about 6%. Engler Financial has the listing.
The garden-style property, called the Resort at Pembroke Pines, has two features that could spur demand from large investors: a low-rate assumable mortgage and a value-added component uncommon to recent offerings of stable properties.
The $120 million mortgage, equal to 60% of the estimated value, was originated via Fannie Mae. The floating-rate loan, whose current coupon is just 1.6%, matures in August 2015.
A buyer could seek to boost rents by upgrading some or all of the units. Two other properties in the city - La Salle Apartments Lakes at Pembroke and Landings at Pembroke Lakes - have undergone interior upgrades in recent years and command rents about $200 higher than the $1,300 average at the complex up for sale.
The Class-A property is 94% occupied, up from about 88% when the residential market crashed. New tenants had been offered as much as three months of free rent at the market's low point, but concessions now average about a month.
The listing will be a good gauge of investor interest in stabilized rental properties in South Florida, which was devastated first by the condo-market collapse and then by the recession. Few stable properties have traded since 2008. Most of the activity has centered around distressed Class-B complexes and failed condo developments earmarked for rental.
The Resort at Pembroke Pines was completed in 1990. CalSTRS and Chicago-based Heitman acquired it in March 2005 from Waterton Associates of Chicago via a portfolio. The transaction valued the Resort at Pembroke Pines at $181 million. The other two apartment properties included in the $252 million purchase are also in Pembroke Pines.
The Resort at Pembroke Pines was damaged in 2005 by Hurricane Rita, but underwent $12.5 million of exterior renovations funded by insurance payments. The property includes pools, fitness centers, a car wash and tennis courts.
For more information, call Engler's Greg Engler at 678-992-2000.