By Gail Kalinoski
Known for its value-add repositioning of multifamily properties, Castle Lanterra Properties is taking on a different challenge—a recently built 259-unit apartment community in West Palm Beach, Fla.—as it enters the growing Southern Florida market with a $63.5 million purchase.
For its first acquisition in Palm Beach County, the privately-held New York-based real estate firm chose Loftin Place, a Class A, mid-rise community completed in late 2015 that offers views of the city, Intercoastal Waterway and Atlantic Ocean beaches. The eight-story asset’s amenities include a rooftop tennis court, jogging track, resort-style pool, fitness center and yoga studio, conference center, outdoor billiard table and BBQ area, bicycle storage and free onsite repair shop and garage with remote access. Studios, one- and two-bedroom units feature nine-foot ceilings and high-end finishes with energy-efficient LED lighting and Energy Star appliances.
“Historically, our name and reputation has been closely associated with the value-add investment space. However, with a brand-new, best-in-class asset like Loftin Place our strategy is to implement CLP’s style of asset management while capitalizing on the core strength of the Palm Beach County market,” Elie Rieder, CLP founder & CEO, said in a prepared statement.
The company, which owns and operates its properties, typically repositions through capital improvements. In this case, the business plan calls for operational enhancements to increase efficiency, reduce costs and increase NOI, as well as new amenities to enhance the resident experience. Part of that plan includes preferred parking, a package concierge service and additional storage.
Noting that rents in the market have increased by an average of 6.5 percent a year since 2014, Rieder said the previous owner, Cypress Real Estate Advisors, was very successful in the initial lease-up of the property.
Rieder said CLP was attracted to the market for its strong fundamentals, including a diverse local economy, corporate expansion and positive supply and demand dynamics for a high-end rental product.
“We also felt the property had deep intrinsic value, given its attractive pricing on a per unit basis, low in place rents relative to the market, and favorable demographics, including a high concentration of millennial tenants with an average annual income of $135K (an income-to-rent ration of 6x). These were also key factors in making a decision to move forward with the acquisition,” Rieder stated.
Avery Klann of ARA Newmark represented the seller. David Layman of Greenberg Traurig and Mitch Clarfield of Berkeley Point Capital represented CLP.
Formed in 2009, CLP owns and manages a portfolio comprised of 8,900 units valued at over $1.5 billion. The firm has its largest presence in Texas, where it recently made its first purchase in San Antonio, Texas, – Agave, a 349-unit Class A apartment community. Last summer, it acquired 1825 Apartments, a 455-unit multifamily property in Austin, Texas, which at the time was its third Austin purchase. The firm now owns four Austin properties along with assets in Corpus Christi, Texas. Other multifamily communities are located in New Jersey, Maryland, Colorado, Georgia, Illinois, Alabama and Virginia.