UPDATED: May 2, 2018 4:33 PM — A California-based real estate investor paid $5.8 million on Monday to enter the Florida market via Orlando, buying his first apartment complex near downtown with an eye for more in what he considers a value market.
Located at 200 Agnes Court and southeast of downtown Orlando's Lake Lucerne, the 1-acre property is home to the 36-unit Delaney Court Apartments, which date to 1959.
The buyer was 200 Agnes LLC, an investment vehicle for Chun Chung "Johnny" Yeung. He's a Native of Hong Kong now based in southern California, and had invested up until now just in single-family rental homes in that state.
"This is my first (commercial or multifamily) property investment," he told GrowthSpotter on Wednesday. "I've brought my family to Orlando in recent years for the Disney parks, and noticed a lot of new infrastructure work. That and the relatively affordable price of housing compared to California showed Orlando has room for growth."
The property was near full occupancy at time of sale, with no deferred maintenance. Yeung brought on Atrium Property Management this week to oversee the asset.
Cosmetic upgrades to the exterior are the only near-term investments planned, Yeung said. Interior upgrades to units have not been decided yet, he added.
Looking forward, Yeung described himself as a conservative investor who will continue to look for more value-add property investments in Greater Orlando.
The sellers were two affiliates of Orlando-based The Watson Group, which previously paid $4.6 million in 2007. The Watson family has invested, managed and developed real estate locally for 33 years, much of that being affordable housing.
The company "just thought it was time" to divest of this Delaney Court asset, said co-owner Bonnie Watson. The family has no plans to try and reinvest their proceeds on a deadline to fulfill a 1031 exchange opportunity.
Joe LaFleur with 100units.com served as listing agent for the Watsons. He said the property was marketed for a week at most before lining up Yeung as buyer, who his company was in contact with from previous deals.
The property offered gross scheduled income of $520,560 and a Cap rate of 6.33 percent, according to LaFleur.
The buyer sourced a $3 million mortgage through CBRE Capital Markets to help finance the acquisition, which will mature in May 2038.