Sterling JV Pays $38M for Tampa Apartments Despite Soft Market
- Jul 23, 2008
Sterling American Property Inc., in a JV with The Collier Cos., has purchased the St. Croix Apartments, a 540-unit, gated, resort-style apartment community in Tampa, for just north of $38 million. The seller was Sentinel Real Estate Corp., a real estate investment management services firm. The complex will be managed by Paradigm Properties, a Collier subsidiary that is the largest owner/manager of apartment communities in North Central Florida. Senior vp/acquisitions Jeff Smith handled the acquisition for Sterling, and Sentinel was represented by James Bobbitt and John Selby of CB Richard Ellis Inc.’s Tampa office. The purchase is Sterling American’s first residential acquisition through its SAP V fund, which has so far deployed more than 60 percent of its $610 million. Smith told CPN today that SAP got “great financing” through Wachovia and Freddie Mac: a seven-year fixed-rate loan at under 6 percent and with a 70 percent LTV. The apartment complex is “the ideal live/play environment for the 20- to 30-year-old age demographic that populates this area,” Smith said in a prepared statement. St. Croix Apartments is on Bruce B. Downs Boulevard in northeast Hillsborough County, close to I-75 and I-275, and not far from the University of South Florida. Built between 1988 and 1991, the community consists of one- and two-bedroom units averaging about 750 square feet. Amenities include two tropical swimming pools, two heated spas, a fitness center, three tennis courts, a sand volleyball court, business center/video club, laundry facility, car wash station and clubhouse. Sterling has said it will invest nearly $3 million in enhancements at St. Croix Apartments, including complete renovation of the clubhouse, redesigned landscaping, new kitchen and bathroom countertops and cabinets, and new wood flooring and lighting. Added amenities will include new patio furniture, a misting area, an outdoor kitchen and grill, and a sandy “beach” area near the pools. Just three weeks ago, for an update on the South Florida residential condo market, Smith told CPN that between an oversupply of condos, many of which are available for lease, and a sizable shadow market in single-family homes, the region is one that favors tenants. He noted that tenants can sometimes rent a house for no more than they would pay for an apartment. In the interview today, Smith, a Tampa-area native, told CPN that the submarket in which St. Croix Apartments sits has “several barriers to recession,” among them several large employers, especially including the University of South Florida, a major research center and the nation’s ninth-largest university in terms of students enrolled. Smith noted that Paradigm, which manages about 6,000 units of market-rate apartments and about 2,000 beds of student housing in Florida, tries to target university-centered apartment communities like St. Croix. He added that St. Croix has 91 percent occupancy and an adjacent apartment complex managed by Paradigm has 96 percent. Considering that SAP’s improvements will take St. Croix Apartments from Class B to B-plus or even A-minus, Smith said, and that he expects a local turnaround by next spring, the complex should be a sound investment over a several-year hold, he concluded. Sterling American Property Inc is a real estate investment affiliate of Sterling Equities and American Securities L.P. Since 1991, SAP’s first four real estate funds have invested in more than $3 billion of assets in 43 states, often in joint venture partnerships.