Bradenton's Carlton Arms trades for record $110.5 million

FLF Holdings LLC Managing Member Joshua Simon says his company was drawn to the Carlton Arms of Bradenton apartments, in part, because of its pristine, waterfront setting.

“We like the Bradenton area very much, its mix of demographics and location, and when you drive into the property itself, it feels like you’re in a park,” says Simon of Carlton Arms.

In addition to being one of the few multifamily rental options on the water in either Sarasota or Manatee counties, the 900-unit complex at 5200 Riverfront Drive also is unique because it encompasses 100 acres and was owned by the same firm for nearly four decades.

That mix of attributes, together with nearly full occupancy, led FLF to acquire Carlton Arms earlier this month for $110.5 million — a record amount for a Southwest Florida multifamily apartment community.

The second-largest purchase, by comparison, amounted to $95.25 million, in 2016. There, Starwood Capital Group bought the 936-unit Gulfstream Isles Apartments, in Fort Myers.

Institutional investors like Starwood and smaller, private firms like FLF alike have been drawn to multifamily assets throughout Florida and nationwide as a result of declining home ownership rates, increasing population influx, steady job growth and a relative lack of new construction as compared to historical averages.

“Interest in apartments remains very very healthy throughout Florida because the state is a growth market, and the Sarasota and Bradenton areas are no different,” says Matt Mitchell, a senior managing director at commercial real estate brokerage firm Holliday Fenoglio Fowler L.P., who together with firm Director Zach Nolan represented Carlton Arms’ sellers in the deal to FLF.

“We’ve seen a large showing of private as well as institutional investors in the state over the past 12 to 18 months, in particular, looking for various types of properties across the board,” says Mitchell, who also negotiated the Gulfstream Isles transaction with Starwood.

Investor Frenzy

"We'll continue to operate it in a similar fashion to Mahaffey. They kept it in fantastic condition over the years." — Joshua Simon, FLF Holdings

FLF isn’t the only investor to step up of late, either, with major acquisitions.

Dallas-based Lantower Residential, a subsidiary of H&R REIT, spent $173 million beginning in October to acquire two Tampa-area complexes containing 900 units. Lantower officials did not return telephone calls for comment on the purchases of the Lantower Brandon Crossroads or Seneca at Cypress Creek complexes.

In the Tampa area alone in 2017, apartment trades generated more than $2.1 billion in sales volume, according to real estate research firm Yardi, even as per-unit prices climbed to a post-recessionary peak of $125,970.

At the same time, the Tampa area’s population is expected to grow at twice the national average through 2020, Yardi notes, an influx that will likely further drive apartment transactions and continue to push down capitalization rates.

At Carlton Arms of Bradenton, Simon says FLF will continue to operate the complex the way seller Mahaffey Apartment Co. and Brighthouse Life Insurance Co., a MetLife affiliate, did. Mahaffey had owned Carlton Arms since its completion in 1980.

“They kept it in fantastic condition over the years,” says Simon.

Simon notes that the only immediate changes being considered to the 38-year-old complex will likely be in the form of new amenities.

Today, Carlton Arms contains a raft of traditional apartment amenities, including swimming pools, tennis and basketball courts and clubhouses, as well as unique offerings like a dock and 50 boat slips on site.

“It’s an older property, so we’ll be looking to add some modern amenities,” he says. “We haven’t finalized our plans as yet, but we’re likely talking abut upgrading the fitness center, adding some walking trails, perhaps a kayak launch.”

“There are already some pet owner amenities in place, and we’d like to add to them, and we may put in some pavilions or areas for bird watching, because the habitat there is really unique for that, and maybe a game room,” Simon says.

“The idea overall is to bring the amenity package in line with today’s desires. Most importantly, we’ll be working to keep the tenants we have happy and satisfy new tenants as they come to the community.”

Founded in Jupiter in 2002, FLF today owns more than 2,500 apartments, including the 351-unit Barcelona Apartments, also in Jupiter. The company also owns the Jupiter Business Center, a 48,000-square-foot office complex; Columbia Plaza, a 48,000-square-foot medical office building in West Palm Beach; and the County Line Commerce Park, a 400,000-square-foot project in Philadelphia.

And while FLF’s acquisition of Carlton Arms set a new record for overall pricing for a Southwest Florida apartment project, experts say Carlton Arms’ place in the region’s multifamily record book could be relatively short lived.

“Multifamily projects continue to be an attractive place for investors, because they’re one asset class that provides stable returns without a lot of the associated capital risks other types of real estate investment often incur,” Mitchell says.