Canadian investor latest on multifamily bandwagon

BUYER: Cherishome Lakeland LLC
SELLER: ALV Apartments L.P.
PROPERTY: 1555 Village Center Drive, Lakeland
PRICE: $45,988,000
PREVIOUS PRICE: $4,586,000, November 2007

Continuing a wave of multifamily deals throughout Florida this year, a Canadian apartment operator has spent nearly $46 million to purchase a 13-building rental community in Lakeland.

Cherishome Living, of Ontario, has renamed the Alexan at Lakeside Village apartments Town Center at Lakeside Village. Rents in the 312-unit community range from $925 per month to $1,500 per month.

“We like the area because it's very close to the luxury shopping district in Lakeland, there's considerable walkability and we're familiar with it because of another holding,” said Chaya Starker, Cherishome's vice president of operations for the United States. “It's just an excellent location.”

The complex, on nearly 21 acres, was constructed by seller ALV Apartments L.P. in 2009, according to Polk County property records. ALV Apartments paid $4.58 million for the Lakeland land in October 2007.

Cherishome completed the transaction with a $34.11 million loan from M&T Realty Capital Corp., records indicate.

Starker said the company is installing new lighting, flooring and appliances to upgrade Town Center's units.

The Alexan deal comes as investors and apartment operators are clamoring for well-located, high-quality rental communities throughout the state.

Earlier this month, Pollack Shores Real Estate Group spent $64.5 million to buy the 400-unit Lexington Park Apartments in the Westchase area of Tampa — the latest in a raft of apartment transactions in which buyers are often paying at, or near, replacement costs to secure high caliber assets.

Apartment sales have become prolific because occupancies have hit record highs amid climbing rents statewide, against a backdrop of waning home ownership rates and macro-economic demographic shifts.

Those forces — together with job growth, increased household formations and rising prices for single-family homes — have pushed apartment values and development, in turn, for the past four years.

“The multifamily sector continued to experience remarkably solid fundamentals,” real estate firm Franklin Street reported earlier this month. “With limited supply available, both core and value-add opportunities continue to be highly sought after by institutional buyers, large private groups, and individual investors.”

Franklin Street and Axiometrics, a Dallas-based firm, also note that occupancy rates nationwide have risen above 95%, a level the industry considers properties to be “full.” Franklin Street adds that Florida rents are now above 2007 levels, and Axiometrics reports that U.S. apartment rents climbed 5% for the first time in four years.

Development, meanwhile, of nearly 500,000 new units last year and in 2015 is expected to have little impact on the sector.

“With record new supply coming to market, the fact that the occupancy rate continues increasing demonstrates the strength of the market,” says Stephanie McCleskey, an Axiometrics vice president.

Still, McCleskey warns that the continued growth in the sector could have a downside eventually.

“At this point, affordability could become an issue in some markets, and the high rent-growth levels in other markets are unsustainable,” she says.

In addition to the 1555 Village Center Drive complex, Cherishome also owns rental communities elsewhere in Lakeland, Gainesville, Pinellas Park, Orlando, Sanford, and Winter Park, according to its website.

Its other Lakeland holding is the Willow Brooke Apartments, near Lakeside Village in the Oakbridge planned community.

Founded in 1981 by Richard McArthur, Cherishome, formerly McArthur Properties, today owns and manages 17 apartment properties in Canada and the U.S. — all in Florida — containing nearly 4,000 units in all.