Out-of-state buyers are swiftly cherry-picking multifamily real estate across South Florida, igniting a flurry of big-dollar trades from Miami-Dade to Palm Beach counties.
At least 11 apartment communities have changed hands over the last three months in deals valued north of $49 million each for a combined value approaching $1 billion.
Arnstein & Lehr real estate lawyer Michael Denberg said buyers are drawn to the region’s steady population and job growth, two factors that have helped support rising rental rates. Employment is up 2 percent to 3 percent in each county: Nearly 20,000 jobs were added in Miami-Dade, 25,000 in Broward and 14,000 in Palm Beach in the year ended in March. Rental rates rose across the board, especially in Miami, where the average increased 7 percent, according to Marcus & Millichap‘s second-quarter multifamily report.
Denberg, who represents buyers looking for value-add plays, said his clients are attracted to Class B property because once renovated, the older product offers “great cash flow,” a rosy return, and “meets and exceeds equity partners’ expectations.” Another driver is the ease of landing a loan.
“The lender market is terrific,” Danberg said, adding government agencies have dominated the acquisition financing space of late. “Even today the local banks are getting a little more involved in financing these types of transactions.”
This year’s largest trade was a $159 million acquisition of the Montage at City Center by Harbor Group International in Pembroke Pines.
Cushman & Wakefield vice chairman Robert Given said the April transaction, which included 700 apartment units, pointed to a rebound in investor sentiment after a slow start this year. He predicted a robust second quarter — and he was right. Buyers have spent at least a combined $940 million on the region’s rental market since April. The apartments range widely from a 1980s-era complex in Boynton Beach to Fort Lauderdale‘s newest luxury urban high-rise.
“South Florida continues to be a bright spot in national portfolios” for institutional investors, said Roberto Pesant, managing director of Walker & Dunlop Investment Sales.
Recent sales include the Aviva Coral Gables, a 276-unit complex acquired by Boston’s Berkshire Group for $100 million. The 2015-built community was the second large complex to trade in Coral Gables this year. The Milagro apartments, which sit two blocks from Miracle Mile, sold for $78 million to New York’s Wafra Investment Advisory Group Inc. a few weeks prior.
Miami-Dade saw at least three additional deals close in Miami, West Miami and Kendall — all within a two-month period.
TH Real Estate recently purchased the Laurels at Jacaranda in Plantation for $93 million, one of at least five multifamily properties to sell over $60 million in Broward since April. The activity stretched north to Palm Beach County, where a 300-unit Boynton Beach complex exchanged hands to a Los Angeles investment firm. TruAmerica Multifamily acquired Ashley Lake Park for $49 million in July.
“The majority of those acquisitions were made by groups who were already exposed and are increasing their exposure to that submarket,” Pesant said. “Investors feel good about deploying their capital here.”
Apartment development is set to peak in all three counties this year as builders work to keep up with demand. More than 15,500 units are set for delivery in 2017, most of which is rising in Miami, according to Marcus & Millichap.
While vacancies are expected to increase as more units enter the market, Pesant doesn’t see investors shying away any time soon.
“Investors are always watching supply, but in light of job growth and population growth, it seems relatively manageable,” Pesant said.
Source: DBR
