Apartment Deals Getting More Complicated

TAMPA, FL-The purchase of a Tampa Bay area apartment complex by a Chicago-based non-profit organization demonstrates just how complicated multifamily transactions can be lately. Part of the complexity can be narrowed down to a three-letter acronym: HUD.

Seminole-based NAI Tampa Bay arranged the $5.5-million sale of the 104-unit Oceanside Apartments in Pinellas Park on behalf of Mallah Family Investments. The purchasing entity, Oceanside Affordable Housing, closed on the senior apartments after more than a year.

John Burpee, president of NAI Tampa Bay, points to “unforeseen HUD issues” as causing extensive due diligence and additional paperwork. The price for the one-bedroom units at Oceanside pencils out to nearly $53,000 per unit.

“It seems like every deal you do today has hair on it,” Burpee tells GlobeSt.com. “Sometimes you have to shave the dog three times to find out what breed it is.”

Burpee adds that many current transactions are receivership sales, while some other apartment properties are owned by smaller, inexperienced lenders. There is also still a wide gap between buyers and sellers on pricing expectations, he says.

Multifamily sales activity is starting to pick up in the Tampa Bay market, with NAI Tampa Bay currently under contract on five properties with at least 100 apartment units. “It’s a matter of putting the players together,” he says.

Elsewhere near Tampa Bay, Marcus & Millichap Real Estate Investment Services arranged the bulk sale of 199 condominium units at Allegro Palm in Riverview for nearly $6.3 million, or $31,400 per unit. A local private investor purchased the condos from the FDIC, which serves as receiver for Chicago-based Corus Bank.

The 432-unit Allegro Palm apartments had been slated for conversion to condos over the past four years, says Greg Matus, regional manager of Marcus & Millichap’s Fort Lauderdale office. Investment brokers Evan Kristol and Still Hunter III represented the FDIC in the transaction.