Continental Realty Corporation (CRC), a Baltimore-based real estate investment and management company active in 12 states, has acquired its second multifamily community in Florida with the recent $82 million purchase of Henley Tampa Palms, located at 15350 Amberly Drive near Tampa. Formerly owned by 29th Street Capital and delivered in 1997, the 315-unit, two-story apartment community was 94 percent leased at the time of this transaction. Berkadia Florida Investment Sales represented the seller in this transaction.
This is the initial asset purchased on behalf of the Value-Add Multifamily Fund I, LP (VAMF I), a closed-end private equity fund sponsored by CRC. The fund focuses on acquiring value-add opportunities in high-growth markets in the Southeast portion of the United States.
The acquisition, which follows CRC’s purchase earlier this month of Dartmoor Place at Oxford Square, a 258-unit multifamily community in Howard County, Maryland for $86.5 million, represents the company’s second multifamily community in the greater Tampa area. In addition to Grand Reserve at Tampa Palms, a 390-unit multifamily community situated three miles from Henley Tampa Palms.
Large-format design creates 1,375 square foot average unit size
Situated within Tampa Palms, a 4,100-acre master-planned community with 28 residential villages and surrounded by hundreds of acres of natural preserves and wetland areas, Henley Tampa Palms is comprised of 53 two-story garden-style apartment buildings featuring one-, two- and three-bedroom floorplans ranging from 941 to 1,671 square feet of space. The private-entry and large-format design concept produces a 1,375 square foot average unit size that is the largest available floorplan in Tampa Palms. More than 33 percent of the units offer a 1,600 square foot unit size and the three-bedroom units are equipped with two-car garages featuring direct unit access.
Each Henley Tampa Palms apartment home features direct-entry access with attached one- and two-car private garages. Standard features include nine- and 10-foot ceiling heights and interior finishes such as plank-style faux wood flooring, island kitchens, oversized closets, white appliances, Roman soaking tubs with separate showers, bay windows, screened patios, and fireplaces. Building exteriors feature aesthetic Mediterranean-style architecture and interiors are designed with separate dining rooms, mudrooms, laundry rooms and seating areas.
Resident amenities include a large clubhouse and fitness center equipped with an indoor racquetball court, conference room, laundry facility, package retrieval system and other dedicated spaces for use by residents. Outdoor amenities include a resort-style swimming pool, preserve picnic area, dog park, and car wash.
The multifamily community is situated adjacent to a robust community center and park system offering sports fields, tennis courts, playgrounds, basketball courts, picnic area and miles of outdoor trails among Amberly Park, Compton Park, and Hampton Park. The nearby Bruce B. Downs Boulevard Trail is a seven-mile path offering access to commercial areas and scenic routes. The community is also within proximity of Flatwoods Wilderness Park, which offers nine miles of multi-use trails, the three-mile Amberly Drive Loop and the nearly six-mile Tampa Palms Loop.
Opportunity to reposition asset from Class B to Class A to add substantial value
“Henley Tampa Palms provides the unique opportunity to acquire a highly-differentiated asset substantially below replacement cost to unlock the upside potential of a strategically-located multifamily community with a clear value-add strategy,” stated Ari Abramson, CRC’s Vice President of Acquisitions. “We intend to transform the property via a carefully-orchestrated value-add program encompassing extensive interior unit renovations and upgrades, enhancement of common areas amenities, and investment in deferred maintenance. Our nearby Grand Reserve at Tampa Palms community is among the top-performing assets in CRC’s portfolio, and we have a deep understanding of and extensive relationships in the greater Tampa area which we intend to leverage in our improvement plan. This will be coupled with the use of our in-house data analytics team and best-in-class asset management capabilities.
“Acquiring a large-format designed property with distinctively large units in a highly sought-after master-planned community matches the investment strategy of our Value-Add Multifamily Fund,” Abramson added. “The investment capitalizes on the strong submarket fundamentals of the greater Tampa area in a high-growth southeastern market. The Tampa Palms community offers Henley Tampa Palms residents immediate access to community parks, a top-rated school system and upscale amenities. The community is within a 20-minute driving radius of more than 26 million square feet of office space, nearly 11,000 hotel rooms and nearly 250,000 jobs. Downtown Tampa is less than 30 minutes away and St. Petersburg and Clearwater can be accessed in less than one hour.”
Summary of interior and common grounds improvement strategy
CRC intends to implement a multi-year property improvement strategy designed to enhance the exterior curb appeal, address exterior deferred maintenance, and upgrade common area amenities to meet residents’ present-day needs. The previous owner recently completed interior upgrades to approximately 25 percent of the units.
Highlights of CRC’s improvement plan include upgrading portions of the clubhouse and pool areas, enhancing common areas and the dog park, completing a full landscaping overhaul, painting exterior areas, and repurposing the unused or outdated laundry facility into a package concierge locker system.
Further, CRC intends to upgrade interior units with renovations focused on kitchen and bathroom designs, including upgraded flooring and appliance packages, and the addition of granite countertops, tile backsplashes, shaker cabinetry, and recessed LED lighting.
Other planned updates will feature reimagining the racquetball courts, refreshing the gym equipment in the fitness room and adding cabanas and shade covers to the outdoor pool area.
Tampa Palms growth expected to outpace greater Tampa MSA
Spurred by strong demographics, above average home values and lower rent-to-income ratios, the Tampa Palms submarket’s growth is projected to outpace prospects for the greater Tampa MSA. With a population exceeding three million people, Tampa remains the recognized economic driver of the St. Petersburg-Clearwater MSA, outpacing Orlando’s 2.6 million residents and Jacksonville’s 1.3 million residents.
More than 36 percent of Tampa Palms employees earn more than $100,000 annually, the average home value exceeds $700,000, and the rent-to-home ratio in the area is 22 percent, compared to the 27 percent in the greater Tampa area.
Tampa’s cumulative growth rate over the past three years is 11 percent, the cumulative income growth over this same period is 17 percent, and Tampa is the nation’s 11th fastest growing city in the United States.
Enduring strength of Tampa area tied to robust employment growth
The presence of educational and medical institutions is among the major drivers contributing to sustained economic and employment growth in the Tampa MSA. Five major hospitals are located within a 10-minute drive from Henley Tampa Palms, including James A. Haley Veterans Hospital and Moffitt Cancer Center, as well as the University of South Florida, a research university that generates an annual economic impact of more than $6 billion.
Other top employers in the area include Publix Super Markets (46,500 employees), the State of Florida (36,000 employees), BayCare Health System (32,000 employees), MacDill Air Force Base (31,000 employees), and Hillsborough County School District (23,000 employees).
Nearly 50 percent of residents residing in or near Tampa Palms have earned a bachelor’s degree or higher. White-collar employment is 67 percent.
Future prospects for Value-Add Multifamily Fund
“As the Value-Add Multifamily Fund’s first acquisition, the addition of Henley Tampa Palms to CRC’s portfolio represents an important milestone and spotlights the persistence and hard work of our entire team, along with the key market relationships they created and maintain,” stated JM Schapiro, CRC’s Chief Executive Officer. “With a high-performing multifamily community located just a few miles away, we have the opportunity to scale operations, generate cost and operational efficiencies, and accelerate our search for additional properties that satisfy our investment criteria. Additionally, the ability to source this transaction underscores the diligence of our acquisition professionals.
“Our team plans to continue targeting the southeast region for compelling investment opportunities, based on the favorable climate, high quality of life and the continuing population shift that is following corporate relocations and expansions. Henley Tampa Palms is a tremendous fit for our long-term strategy serving the interests of our investors,” Schapiro added.
