Multifamily owner/operator Insula Companies paid $49 million this week for Arrow Ridge, an affordable rental community in Kissimmee on the east bank of Shingle Creek.
Founding Partner Fred Cochran told GrowthSpotter the company plans to invest another $3 million in renovations to the 320-unit complex that was completed in 1999 utilizing Low Income Housing Tax Credits.
"The rent restrictions have expired," Cochran said. "We're in a period of limited rent increases, but then they burn off fairly shortly."
He projects the market rents will increase up to $150 per unit over the current rates within five years. Insula will rename the community Ridge at 4100.
Cochran said Insula raised its initial offer twice to close the deal.
"We love Kissimmee, and when this hit the market everybody wanted it," Cochran said. "It was one of the most hotly contested properties I've been involved in for quite a while."
Cochran said they like the submarket because of its low vacancy rates. This is the firm's third asset in Kissimmee. In 2016, the company renovated and sold a 1970s era complex on Donagan Avenue, realizing a $13 million profit.
Cochran said Arrow Ridge would be a long-term hold for Insula. The renovations will begin with a full remodel of the clubhouse and amenities, painting the exterior of all the buildings and upgrading the landscaping.
The company also plans to add a new playground and better utilize the existing segment of the Shingle Creek Regional Trail that includes a pedestrian bridge linking it to a county park.
"It's a great amenity -- we want to make better use of that," Cochran said.
The apartment interiors will be renovated over the next several years as vacancies occur, starting with new kitchens, bathrooms and appliances. The goal is to modernize the units without overspending.
"We'll do two or three different finish levels and show them to prospective tenants," Cochran said. "Of course everyone wants quartz counters and stainless steel appliances, but not everyone can afford them."