Pembroke Pines Apartment Complex Fetches Lower Price
An apartment building complex in Pembroke Pines, Florida, recently changed hands for $110 million. This represents a 9% decrease from the price paid by the previous owner two years ago. The buyer, Abacus Capital Group, acquired the 368-unit Marela Apartments for roughly $300,000 per unit.
Shifting Market Conditions in South Florida
This sale reflects a potential slowdown in South Florida’s once-booming multifamily market. The past four years saw a surge in investor activity, but rising interest rates, increased property management costs, and skyrocketing insurance premiums are putting a strain on profits. Additionally, the post-pandemic surge in demand for rentals has plateaued or even declined in some areas.
Details of the Sale
Rreef, a subsidiary of DWS Group, sold the Marela Apartments to Abacus Capital Group. The complex, located at 250 Northwest 130th Avenue, consists of three-story apartment buildings and clubhouses. Built-in 1998, it offers one to three-bedroom units with rents ranging from $2,021 to $3,127 per month. Notably, Rreef paid $121.3 million for the property in 2021, translating to $329,484 per unit. This recent sale reflects a decline in price per unit.
Abacus Capital Group’s Acquisitions
This isn’t Abacus Capital Group’s first foray into multifamily acquisitions. In April, they purchased a 236-unit complex in Los Angeles and owned a pair of rental properties in Miramar, Florida.
Market Challenges for Multifamily Investors
Rreef isn’t alone in experiencing losses on South Florida multifamily investments. The Federal Reserve’s interest rate hikes and significant insurance premium increases have created a challenging environment for investors nationwide, with Florida properties taking an additional hit from insurance costs.
Examples of Market Pressures
Similar situations have unfolded with other investors. Last year, Shidler Group sold a Fort Lauderdale apartment complex at a 22% discount, and San Antonio-based Lynd is facing financial difficulties with a Miami Gardens property due to rising insurance and payroll costs. Another recent sale, The Manor at Plantation, also reflects a decline in value compared to the purchase price a decade ago.
Conclusion
The sale of the Marela Apartments in Pembroke Pines highlights a potential shift in South Florida’s multifamily market. Rising costs and a cooling rental market are squeezing investor profits, leading to discounted sales and potentially impacting future investment decisions.
