ORLANDO, FL - Bluerock Residential Growth REIT announced that it has acquired a 252-unit Class A apartment community in Orlando, Florida, known as Arium Palms at World Gateway. The property, which the Company acquired through a joint venture for $37 million, is located in the prestigious Celebration submarket, one of Orlando's most affluent, and minutes from the main entrance to Disney World.
Arium Palms is projected to yield a pro forma stabilized cap rate of approximately 6.8%. This compares favorably to cap rates of 5.25% to 5.50% for assets of similar quality in the market. The Company sourced the transaction off-market through its operating partner, Carroll Organization.
BRG invested 95% of the venture's equity requirement, or approximately $13 million, with an affiliate of Carroll funding the balance for a 5% stake in the venture. The joint venture further capitalized the property with an acquisition loan of approximately $25.3 million.
Built in 2007, Arium Palms is a Class-A multifamily community featuring one-, two- and three-bedroom unit layouts averaging a 1,074 square feet. BRG plans to refresh the eight-year-old complex by upgrading and activating amenities to enhance the property's live/work/play environment and while also upgrading unit interiors to bring rents into line with comparable luxury properties in the area.
"We are tremendously optimistic about this opportunity. The grounds are beautiful, the location is in demand, the market is growing, and vacancy rates are low. In addition, Carroll has an excellent ability to understand the local market and a proven track record of maximizing property rent rolls," said Ramin Kamfar, Chairman and CEO of BRG.
The Arium Palms community features multiple amenities including controlled access gates, a resort style pool, a sand volleyball court, fully equipped fitness center, gazebo, dog park, auto detailing center, and business and media centers. The property also features 140 units with attached garages with direct unit access, otherwise unavailable in the local market.
Arium Palms sits within the upscale Celebration sub-market, home to two award-winning public schools, multiple Class A office parks, Celebration Health hospital, several sports/recreation complexes, a public library, community parks, and an 18-hole championship golf course. The community's Orlando MSA is robust and growing, supported by job growth that has outpaced the averages for Florida and the US overall since 2003 and population growth in excess of 9.1% over the past five years. The area benefits from significant strength in healthcare, technology and tourism, with several major hospital groups expanding aggressively to meet the needs of the area's growing population. Orlando is also home to 2,600 companies in the technology industry, employing over 42,000 people and, as a top tourist destination for both domestic and international travelers, the area's economy benefits from a globally-recognized tourism industry that delivers an economic impact of more than $50 billion.
Vacancy in Orlando in 2014 was at a multi-year low. The continued expansion of payrolls, coupled with a relatively young rental-oriented demographic, is expected to contribute to continued tight vacancy and good rent growth in the coming year.