There's quite a few buyers in South Florida in the market for value-add multifamily. Good luck finding those unicorns though, says one well-known multifamily investment broker.
We spoke with ARA Newmark's Hampton Beebe fresh from two apartment sales for his client AION Partners in NY: Serrano, a 234-unit complex in West Palm Beach, and Park Plaza Apartments, a 234-unit property in Miami Gardens, for a total of $48.6M.
Hampton brokered the deal along with his team—Avery Klann, Jonathan Senn, Dick Donnellan and Marc deBaptiste. NY-based EB Real Estate Group picked up Park Plaza while Tampa-based Southport Financial Services bought Serrano.
Hampton says AION experimented with the value-add theory on the properties prior to marketing them for sale, pumping capital into renovating a handful of units to see what would happen.
What happened was a quick boost in rents by $150/month on average, he says. And that's the dream chased by many investors wanting in on South Florida's hot multifamily market: a vintage product that can be refurbished and rents propped higher. Therein lies the problem, Hampton says.
“What we're seeing is that there's just not a lot of product on the market. So the real value-add stuff, which is typically '80s and '90s vintage and even some of the older '70s stuff, there's just not a lot of it on the market.”
But that means investors are paying up for what does come available. A recent Marcus & Millichap report notes average asset values climbed more than 12% to $195,300/unit during the past year as yields dropped 30 basis points to 5.8% in Q1.
Hampton echoes that, even saying some value-add apartments could fetch 4.6% cap rates in great locations. “In South Florida, at any one time you might have just two or three value-add deals on the market. So when stuff comes up, you get a lot of activity on it.”
Hampton and the team have a couple of value-add complexes hitting the market, including the Laurels at Jacaranda (here), a 468-unit 1989 complex in Plantation that could fetch some $100M, and Lakeview Cove, a 224-unit complex in North Lauderdale that could see it trade at $170/unit.
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