Ontario-based multifamily owner/operator Venterra Realty paid $78.5 million on March 9 for the 425-unit The District apartments on Universal Boulevard, drawn to the value-add potential of vacant retail space in the growth epicenter of Orlando's tourism corridor, a lead executive with the company told GrowthSpotter.
Located at 9702 Universal Blvd., the 10.1-acre property was developed as a four-story, wrap-style apartment community in 2009, just north of the intersection with Destination Parkway. The sale price reflects a per-unit value of $184,705, according to a deed recorded on Tuesday.
The District also has 25,912 square feet of ground-floor retail situated around a central courtyard, represented by James Mitchell and Kristen Knowlton of CBRE.
That retail space is anchored by national credit tenant Walgreens with 11,000 square feet on a long-term lease. The apartments alone would have been valued in the low $160,000s, but with more than 12,000 square feet of retail space vacant along Universal Boulevard the value-add was clear, said Craig Marbach, Venterra's managing director.
"We think Universal Boulevard will be the future main drag for that (tourism) corridor, what with Universal Orlando planning a theme park across the street, TopGolf and Andretti Karting building attractions, and Shingle Creek Resort."
The property stands to gain further value after the final mile extension of Destination Parkway is completed, which will be the last segment needed to connect International Drive to John Young Parkway. Construction on that stretch is slated to run through April 2018.
Venterra was drawn to the asset by the vacant retail more than anything, Marbach said. Residents of The District were prevously allowed to park anywhere, making it difficult to lease without reserved retail parking.
Early capital improvements by Venterra will include beautifying a hallway that connects The District's parking garage to retail space, improving signage, and reserving spaces in the garage for retail, Marbach said.
A new brewery and restaurant, Half Barrel Beer, should have interior construction start this week for 1,150 square feet at The District, backed by restaurateur Scott Kast.
Another four retail spaces totaling 12,000 square feet or more are available, three of which have restaurant kitchen infrastructure in place.
The seller was Monogram Residential District REIT LLC (formerly Vehringer Harvard District REIT LLC), an affiliate of Texas-based Monogram Residential Trust that previously paid $56 million for the property in December 2010.
Holliday Fenoglio Fowler, LP (HFF) secured $51.2 million in acquisition financing for Venterra with Allstate Life Insurance Company, placing a seven-year, 4.06 percent fixed-rate loan which has four years of interest-only payments.
Directly across Universal Boulevard from The District, developers are preparing the 20-acre Destination Shoppes as phased development of 150,000 square feet of retail, dining and entertainment. The latest plans from November include a 7-Eleven fuel station and 51,438 square feet of retail.
And multifamily developer ContraVest should break ground on horizontal site work in April for the 344-unit Addison at Universal apartments, planned for 12.17 acres across the street from The District and surrounded by the future Destination Shoppes.
Looking forward, Venterra will be actively seeking more assets in Orlando. The company recently hired Ryan Smyth to serve as associate director of acquisitions in Orlando.
"We're looking for properties from 1985 or newer that are well-located and have some kind of value-add opportunity," Marbach said. "We do purchase a lot of deals off market, or deals with loan assumptions that many investors typically avoid."