Atlanta-based Cortland Partners added another Orlando-area apartment community to its growing Florida portfolio this week with the acquisition of Lugano Apartments in Kissimmee.
Cortland affiliate Savosa FL Partners LLC paid $59.15 million for the class A apartments in the desirable Loop submarket, which were built in 2016. The company has installed its own management team and renamed the community Cortland at Hunter's Creek.
Mike Altman, Cortland’s chief investment officer, told GrowthSpotter he thought the Charlan Brock-designed community looked like it could have fit in West Palm Beach.
"The physical asset was built very nicely," he said. "It's a very luxurious, true Class A community with elevator access."
Las Vegas-based Fore Property Company developed and built the 288-unit complex, which consists mainly of four-story buildings with conditioned corridors. There are also a handful of carriage house units with private two-car garages. Amenities include a pool, clubhouse, indoor-outdoor yoga room, spinning room, fishing pond, dog park, pet spa and car care center.
Altman said the value-add for this project will be in the operations and first-generation lease up. The occupancy rate was still in the mid-80s at the time of sale.
"We've done about 20 of these types of projects now, which we call core plus," Altman said. "It's a very good risk adjustment. The value creation here is less than some of our bigger renovations, like the one we did in Altamonte Springs."
Cortland invested $12 million in renovations at the former Camden Renaissance, which it acquired in 2016 and renamed Allora at Lake Lotus. That property was 20 years old.
The planned upgrades at Hunter's Creek are minor by comparison. Altman said Cortland plans to install artificial turf in the outdoor yoga studio and under-cabinet lighting in the kitchens.
"The amount of value creation is much less proportionally," Altman said. "However, there's also less downtime, less resources and less volatility. So it's a lower return, but that's offset by a faster return."
Cortland owns and operates more than 7,000 units in its Florida markets, which include metro Tampa, Jacksonville, Gainesville and Ocala.
"We remain vigilant in the Florida market and want to expand there," Altman said.