Another mid-1970s apartment complex has sold, continuing the movement of older multifamily communities into the hands of new investors and the overall trend of sales where sellers profit and buyers position for the future.
Beachwold Residential LLC of New York, N.Y., paid $12.44 million in late September for the 27-building River Oaks Apartments in North Jacksonville.
That means the 288-unit project, built in 1975, sold for $43,194 a unit, a big increase over what the seller paid just last year.
The seller, a group led by Varden Capital Properties LLC of New York, bought the property in May 2014 for $7.35 million, or $25,521 a unit.
That’s a $17,673 gain per unit in just over a year.
Brad Coe, director of multifamily investment services for Colliers International in Jacksonville, said he has seen three or four trades of “vintage ‘70s properties,” along with many more newer properties.
Coe expects up to 10 more area apartment community sales this year, in addition to the 26 deals so far in 2015. He’s aware of at least six more that are pending, “and it’s only early October.”
“Generally what happens is the back end of November into December, you see a pretty solid number of trades based on yearend disposition requirements,” he said.
The reason is simple: The sellers make money and the buyers expect to recoup and improve their investments.
Coe explains the “opportunistic buy,” in which a buyer acquires a property and repositions it by cutting expenses, making improvements and raising fees and rents.
“If you are successful, you can sell out to a $10,000-$15,000 per-unit gain,” he said.
Expense control includes reviewing costs for maintenance and repairs, building services, utilities and personnel, he said. Coe said some owners are charging “ratio utility billing system” fees to recapture a portion of the monthly water and sewer fees on a per-unit basis.
Buyers also might make improvements to show tenants the property is being upgraded and higher rents might be coming when it’s time to renew leases.
“The tenants realize those improvements are being implemented and when it’s time for the tenants to renew their leases, they aren’t so opposed to paying an additional $25 or $50 a month, depending on the quality of the asset,” Coe said.
Older properties might have higher maintenance and repair costs, especially if such work has been deferred.
In late September, three older Arlington multifamily complexes sold for almost $56,100 a unit. That’s up from the nearly $21,370 a unit the seller paid for them in 2011, a gain of $34,730 each over four years. Those complexes were built from 1972-75.
Older units typically sell for less. The average sales price for Northeast Florida apartments in the first nine months of the year is $77,614 a unit, according to Colliers International.
The average sales price per unit is higher than last year, when 47 area complexes sold at an average $63,897 a unit.
Coe expects the 2015 average unit price to stabilize between $60,000 and $65,000 by year-end.
Through September, 6,120 units, among 26 complexes, were sold for $475 million.
River Oaks Apartments occupies 21.3 acres at 11291 Harts Road. The property carries a 2015 market value of $7.16 million, Duval County records show.
TH Commercial Investment Corp. issued an $11 million mortgage Sept. 24, the same day as the sale. The deed and mortgage were recorded Thursday with the Duval County Clerk of Court.
2 Tinseltown centers change hands
Two Deer Lake Court strip shopping centers, anchored by World of Beer and Mellow Mushroom, were sold Wednesday for $6.1 million.
Redus Properties Inc. of Charlotte, N.C., through Redus One LLC, sold the properties to NewTinseltown LLC of Gainesville. Redus One took title to the property in December 2013 for $1.15 million.
The property at 9700 Deer Lake Court was built in 2001 and comprises 11,840 square feet on 1.24 acres. Its 2015 market value is almost $2.04 million. Major tenants include World of Beer and Jersey Mike’s Subs.
The property at 9734 Deer Lake Court, built in 2002, is 17,751 square feet and occupies about 2.9 acres. Major tenants include Bento Café and Mellow Mushroom. Its market value is $3.09 million.
NewTinseltown LLC is led by Taraz, Frank and Taraneh Darabi. Frank and Taraneh Darabi are officers in Darabi and Associates Inc., an environmental engineering and consulting firm.
Wells Fargo Bank issued a $4.725 million mortgage. The deed and mortgage were recorded Friday with the Duval County Clerk of Court.
Winn-Dixie center sold
PSK Atlantic LLC of Coral Gables sold the Winn-Dixie-anchored shopping center at 31 Arlington Road S. for $2.55 million.
Point Plaza Partners LLC of Parkland bought the two-building center, which occupies almost 4.9 acres. The 46,222-square-foot Winn-Dixie structure was built in 1988. A second building, at 20,570 square feet, was developed in 1974.
Seacoast National Bank issued a $1.65 million mortgage. The deed and mortgage were executed Sept. 29 and recorded Thursday with the Duval County Clerk of Court.
PSK Atlantic bought the property in 2011 for $2.2 million. The site has a 2015 market value of almost $2.31 million.
Point Plaza Partners LLC is led by Fields-Realty LLC. PSK Atlantic is led by James Kern.
Regency strip center sells for $800,000
Jacksonville-based developer and investor Ash Properties has added a Regency neighborhood shopping center.
Through 9527 Regency Sq Blvd LLC, Ash Properties paid $800,000 for the 11,109-square-foot center on 1.07 acres at the street address indicated in its name. The Jacksonville Bank issued a $640,000 mortgage.
Built in 2005, the property has a market value of almost $1.17 million.
South Coast Commercial LLC, through South Wharf – Regency LLC, sold the property to the Regency Square Boulevard LLC led by Justin Ashourian at Ash Properties.
The deed was made Wednesday and the mortgage on Thursday. Both were recorded with the Duval County Clerk of Court on Friday.
South Coast Commercial, based in Bluffton, S.C., bought the center for almost $2.8 million in late 2012.
@MathisKb
(904) 356-2466