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Three Investors Buying Up South Florida
August 15, 2013

Three Investors Buying Up South Florida

Investment capital is pouring into South Florida commercial real estate, and each kind of investor has its own scorecard when evaluating properties (some are on the metric system, making it next to impossible to understand). Calkain managing partner for South Florida Patrick Nutt tells us who's hungry:

1) Private buyers

"Private buyers tend to pay equal attention to lease terms, tenant credit, and quality of the underlying real estate, usually looking for something exceptional in one or two of those areas before showing any real interest," says Patrick (right, with colleague Michael Zimmerman). The duo recently brokered the sale of 19 Circle K properties operating under a single master-lease agreement. Given the size and lease structure of the portfolio, it was extremely attractive to many institutional buyers, he says. Ultimately, an undisclosed buyer took it for $24M. (We can all agree that "undisclosed buyer" means Batman, right?)

2) REITs

For REITs, "the bigger the better," Patrick says—and while traditionally they're been stringent on requiring properties and their corresponding leases to fit the mold of a 10-year lease term and investment-grade credit, the supply-demand imbalance has caused them to loosen the reigns a bit for both thresholds. "Our Circle K portfolio was an example of that," he says, with attractive credit and seven years left on the lease. Despite that, the portfolio attracted more than 40 suitors, including some REITs.

3) Foreign capital

"International buyers love Florida, and by Florida, I mean South Florida," Patrick says. (They don't want to get too close to Georgia; peaches are strange in any language.) Depending on the investor's home country, they tend to have varying yield requirements. For example, Brazilian investors can buy their native 10-year treasury bond and see a nearly 4.5% yield, so buying a McDonald's in Davie at 4% might be tough to swallow. Investors from other places have fewer local options. In any case, the safe haven of the US combined with a global brand is still enough to entice a lot of investors.

How To Grab (And Keep) Tenants

Yamal Yidios Char - standing casual(1)
To take full advantage of the potential multifamily rent increases in South Florida, it isn't enough just to acquire and hold a property, says Ytech International prez Yamal Char. Landlords still need to improve their properties so that renters will be less temped to bolt when rents jump. (It's all about massaging tenants.) "Rents have followed occupancies in their upward trajectory, and South Florida remains a top-performing area for multifamily investment," Yamal tells us; his firm has acquired about 2,000 apartment units in South Florida to capitalize on that.

Recently, Ytech International completed a $6M rehab of Crystal Lakes Apartments in Miami Gardens, which it bought last year for more than $14M. The 491-unit, gated rental property originally dates from 1979. Ytech did work on its mechanical and roofing systems, facade, and in-unit upgrades such as flooring, bathrooms, kitchens, and appliances. Additional amenity spaces were created for residents in the form of laundry rooms, children's recreation areas, community rooms, and a business center. (Now there's no reason to ever leave the apartment complex.)

Send Us Your Snaps

We're still looking for more vacation snaps. JLL's national retail agency leasing operations lead Kimli Cross tells us she went white water rafting on the Snake River recently (she's the one wearing a life vest, having fun). It's a Class-III river on a scale of I—VI. And the water is cold, she says.

Send vacation stories and pics to dees.stribling@bisnow.com.

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