Seattle-based Horizon Realty Advisors paid $23.25 million last week to enter Orlando's multifamily market, buying a 96-unit student housing property near the University of Central Florida off market that previously traded just 18 months ago.
Located at 10200 University Blvd., the 9.72-acre parcel features The Quad student housing complex, made up of 12 two-story townhome buildings that date to 1999. With 384 individually leasable bedrooms, the sale reflected a per-bed price of $60,546.
"We bought a student property in June 2017 in Tampa near USF, so the fact we had that asset led us to look at nearby cities, and Orlando has such a great story we felt compelled to try and find something there," partner Rob Marshall told GrowthSpotter.
"Thistownhome style was attractive to us, and similar to product we own in other markets. And the story for UCF's growth and the market fundamentals are phenomenal," he continued. "Virtually every property we went to our on comps tour was near 100 percent leased."
The sale closed on March 15 and was recorded Monday in Orange County. The property was 99 percent leased at time of sale.
The seller was Atlanta-based Chance Partners, which previously paid $17.5 million in September 2016, marking its own Orlando market entry at the time.
Horizon worked through Texas-based Fourpoints Investments as a brokerage to help search for student housing assets in Florida. Chance Partners was not looking to sell, but Horizon made a compelling offer, Marshall said.
Horizon took over Chance's original $13.35 million Fannie Mae mortgage, which had that entire principal balance still unpaid and bears a 4.17 percent interest rate. The loan matures in October 2026.
Assuming that mortgage was really a contingency set forth by Chance to get the deal done, which helped the seller avoid prepayment penalties. But the 4.17 percent interest rate was also below market value for what Horizon would have gotten elsewhere at closing, Marshall said.
Horizon will make additional investments this year to update original roofs on townhomes at The Quad, and complete interior upgrades on about half of the units, he added.
Looking forward, Horizon organized an $80 million equity fund last year that was fully subscribed in March 2017, and to date has deployed about $55 million of that, Marshall said.
"How much of that may remaining $25 million may end up in Orlando is a guess at this point," he said. "But we'd certainly feel good about getting another Orlando deal, especially a conventional (multifamily) property in our fund."
The company's acquisition criteria for student housing include at least 500 beds, with proximity to public universities that enroll 15,000 or more students. For standard multifamily, Horizon seeks 200 or more units with a preference for the western U.S., Texas and North Carolina.