Tampa-based apartment investment and management firm Avesta Communities paid $30.1 million on Friday for the 344-unit The Park at Cambridge in southeast Orlando. The firm will invest another $4 million in renovations over the next 18 months, and is actively looking to double its Orlando portfolio over the next two years, a managing partner with the company told GrowthSpotter.
Avesta will rebrand the 1970s-era property as "Avesta Bridgewater," which will be managed by affiliate Avesta Homes. Located at 2512 Conway Road south of Orlando Executive Airport, the property is two miles from Avesta Shore Club, an apartment community the company bought in April 2015 for $29.15 million.
"We think the Orlando market is very attractive for us, and think Orlando Cap rates in general are higher than other markets with similar projected growth," said Rachel Ridley. "A lot of that disconnect is due to volatility in Orlando's real estate market in past decades, but we're long-term holders so we can withstand the short-term volatility and capitalize."
Since its founding in 2010, Avesta has acquired more than 10,000 apartments in Florida and Texas with $600 million in total assets. The new property will be its third in Greater Orlando.
The firm's current investment fund is being formed via capital from high-net worth individuals and family wealth management offices, Ridley said.
Avesta invested millions last year in renovations at Avesta Shore Club after purchase, and achieved stabilized pro-forma rents within 10 months of acquisition, Ridley said.
The company now plans to pump $4 million into interior and exterior capital improvements and deferred maintenance at its new Avesta Bridgewater site, with plans for the work to start this month. The company has an established network of local vendors for its property renovations, Ridley said.
"It's a Class C-plus community that we hope to elevate to the (Class) B level," Ridley said. "We'll try to get the exterior done quickly and then turn over units as they become available."
Avesta acquired a $24.7 million loan to finance part of the acquisition from Berkadia Commercial Mortgage.
Looking ahead through the next 24 months, Avesta has an ambitious "50,000 Resident Plan," with the goal to quintuple its current unit count in Florida and Texas. The company favors older multi-family assets it can quickly add value to through redevelopment, and raise rents to market rate, Ridley said.
"Middle market deals where you need $5 million to $20 million in equity is where we like to play," she continued. "Orlando is a market we're consistently underwriting deals for. Our head of construction lives in Orlando, so we're very excited about the opportunity there."
Avesta cites data from the Bureau of Labor Statistics that project Orlando's employment growth through 2018 to nearly double the national employment growth rate, and that Orlando's population growth will outpace the nation's population growth three to one through 2019.
The Parks at Cambridge property was sold by an affiliate of Tampa-based Blue Rock Premier Properties, which had bought it in October 2010 for $14.38 million.