PENSACOLA, FL - In its first acquisition since transitioning from single-family rental homes to institutional multifamily apartments, PIA Residential of Miami has acquired Crystal Lake, Apartments, a 224-unit value-add community in Pensacola, FL for $26.3 million. The 24-acre Class B rental community at 7680 West U.S. Highway 98, is 98 percent occupied.
“Crystal Lake has the potential to increase rents significantly since comparable properties in the market with un-renovated units currently command much higher rent levels,” says Saul Levy, PIA Residential’s co-founder and managing director in charge of investments.
“This property is the ideal fit for our new multifamily strategy of acquiring institutional properties that generate strong cash flow and are well-positioned in high-growth markets so they can withstand a downturn in the economy,” adds Levy. “We want to make sure the majority of the return on investment comes from cash flow and not from appreciation.”
PIA Residential will continue upgrading the units and making further improvements to the property with its signature private lake regularly stocked with bass.
Present amenities include a beach volleyball court, BBQ area, kids park, car washing station and a dog park.
Cushman & Wakefield’s Gulf States Team in Birmingham, AL, headed by Jimmy Adams, vice chair and Josh Jacobs, director, brokered the sale for the seller, ExchangeRight of Pasadena, CA.
“This was an exceptional offering because it was built in the late 1990s, was well maintained by the seller, not a lot of capital infusion is required, the historical occupancy is 97 to 98 percent so there is a strong cash flow going in and a proven value add program is already in place that’s delivering a significant rental premium,” says Jacobs.
In closing the deal, Jacobs says, “PIA was very organized, methodical, straightforward and always available to communicate. It was a very smooth close with no issues.”
Financing was arranged by Arbor Realty Trust in New York City. The Fannie Mae loan was originated by Arbor director Ari Short. “PIA got us everything we needed very fast so we were able to secure a quick rate lock,” he says. “It was an unreal deal.”
With decades of experience and thousands of units under management, Michaelson Group, Inc. of. Jacksonville, FL, will be the on-site property managers. “Like PIA Residential, we stay very close to all our residents and will continue to upgrade the community and its amenities to create both an enjoyable living experience for all residents and generate exceptional returns for the property owner,” says Michael Moses, chairman and CEO.
“There is clearly a strong demand for affordable workforce housing to keep up with the tremendous economic growth, currently 3 percent annually and projected to continue,” says Scott Luth, president and CEO of FloridaWest Economic Development Alliance in Pensacola. “While there is growth in the housing sector, we’re behind in that growth.”
Luth notes that job creation and hiring is up sharply as a diverse group of industries expand or launch in and around Pensacola. “The Navy Federal Credit Union has hired 7,500 people in fulfillment of their commitment to hire 10,000 new workers, ST Engineering and Aerospace has committed to 2,000 new jobs. There are 19 tenants in Pensacola’s small business incubator and growth in the government and military sector, particularly at the Pensacola Naval Air Station which is the cradle of naval aviation.”
Rebecca Ferguson, economic policy coordinator in the Office of the Mayor of Pensacola, adds that new jobs are being created by technology and cybersecurity companies that are either moving into or being formed in the city. A reliable barometer of economic health, she notes is airport passenger traffic. “May 2019 set an all - time record for (non-military) passengers flying in and out of Pensacola, a 17 percent gain.”