A smart renovation and strong economy helped a Virginia company realize a $17 million gain this month on the sale of the Lake Tivoli Apartments in Kissimmee.
Chandler Management Corp. paid $49.5 million less than two years ago for the 384-unit complex that was built in 1990 and 2002. The firm sold the asset last week to Utah-based Bridge Investment Group for $67 million after giving the exterior and amenities a refresh.
The gated complex, which is located midway between Kissimmee’s two major hospitals, consists of 36 two-and three-story buildings and was 95-percent occupied at the time of sale.
CBRE’s Shelton Granade, Luke Wickham, and Justin Basquill represented the seller in the transaction. Wickham told GrowthSpotter Chandler benefited from great timing and a strong economy.
“They made some nice improvements to the some of the interiors and the exteriors, and were able to push the rents," he said.
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Colin Apple, managing director of acquisitions for Bridge Multifamily, said the firm still sees value-add potential for Lake Tivoli. Base rents have grown organically by 25 percent since Chandler purchased the complex, he said.
“Newer product is renting for up to $400/month more, providing room and opportunity to complete our value-add business plan to provide higher quality living at a more affordable rent than the Class A product,” Apple added.
Bridge Property Management will take over management, and Bridge will renovate the unit interiors and amenity package. These amenities often include a health facility, a business center, and various recreational areas, coupled with social and community programs such as after-school homework programs for school-aged children, “English as a second language” programs in selected communities, movie nights, ice cream socials and other community events.
The plan falls right in line with Bridge Multifamily’s strategy of focusing on 1980s-2000s vintage two- and three-story garden apartments. The firm issued a white paper in May detailing the value-add potential for Class B apartments:
“For illustrative purposes, an average Value-Add investment of $7,500 in a 1990s vintage asset could result in $1,200 of additional annual revenue; at a conservative secondary market cap rate of 5.5 percent, the value and profit per unit are $21,818 and $14,318, respectively. Or, for every 100 units, there is an additional $1.4 million of upside in operational alpha achieved in addition to market rent growth over the investment hold.”
Bridge is a SEC-registered investment adviser with over $15 billion in assets under management. Bridge manages private equity funds, separately managed accounts, co-investments, and joint ventures.
Bridge operates in 22 states and is heavily invested in Central Florida’s multifamily sector.
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