A year after it transitioned its investment strategy from single-family homes to apartments, a Miami-based firm has made its first acquisition.
PIA Residential bought the Crystal Lake Apartments in the flourishing Florida panhandle city of Pensacola for $26.3 million, or $117,410 per unit. The 224-unit complex at 7680 West U.S. Highway 98 was sold by ExchangeRight of Pasadena, California, which paid $19.9 million, or nearly $89,000 per unit, in 2017, according to CoStar data.
PIA, formerly known as Property Investment Advisors Group, sold a $100 million portfolio of mostly single-family homes and made the change to apartment investment in part because the firm is betting the multifamily sector will continue to generate favorable returns. PIA, which plans to acquire 10,000 units in the next seven to 10 years, has been selectively looking for apartments that could perform well in an economic downturn, according to PIA co-founder Saul Levy.
“That is something we keep very close track of,” he said in an interview. “Our strategy is more defensive than anything else. It does take us a lot of underwriting of many properties to find the right candidates.”
The 22-year-old Crystal Lake site is near full occupancy and has an average monthly rent of $967, according to CoStar data. PIA expects to upgrade kitchens, floors and fixtures in the units to raise rents, preferring that the return on investment comes from cash flow and not from appreciation, Levy said.
Pensacola has seen strong job growth recently with Navy Federal Credit Union hiring 7,500 employees as part of a plan to add 10,000 jobs in the area and ST Engineering and Aerospace creating 2,000 new jobs, according to local economic development officials. Apartment demand remains strong and the market is poised for new construction, according to the latest report from CoStar Market Analytics .
Meanwhile, investor activity has been vibrant in Pensacola, the report noted. More than a quarter of existing inventory traded in 2018 and total volume was the largest in the market’s history.
For the Record:
Cushman & Wakefield’s Jimmy Adams and Josh Jacobs in Birmingham, Alabama, represented the seller in the transaction. The buyer did not have broker representation.
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