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n a recent deal, Rreef Property Trust sold a 368-unit apartment complex in Pembroke Pines for $110 million, marking a significant discount from its purchase price two years ago. This move comes as South Florida's multifamily market is transitioning from its boom times of the past four years. Higher interest rates, increased property management and maintenance costs, and skyrocketing insurance premiums have negatively impacted investors' profits. At the same time, post-pandemic demand has disappeared, and rents have either plateaued or even dropped in some submarkets.
Rreef, a subsidiary of German asset manager DWS Group, sold the 368-unit Marela Apartments at 250 Northwest 130th Avenue to New York-based Abacus Capital Group, according to records and real estate database Vizzda. The buyer secured a $71.5 million Freddie Mac loan for the purchase. The Marela complex consists of 12 three-story apartment buildings and three one-story clubhouses, according to Vizzda. The complex was completed in 1998 on a 21-acre site and offers one-bedroom to three-bedroom apartments at monthly rents ranging from $2,021 to $3,127, according to Apartments.com.
Rreef paid $121.3 million for the complex in 2021, or $329,484 per unit, records show. It sold the complex for $298,913 per unit. Led by CEO Anne-Marie Vandenberg, Rreef didn’t record a mortgage on the property. The firm declined to comment on the discounted sale price.
In April, Abacus dropped $72.5 million for the 236-unit apartment complex at 4735 Sepulveda Boulevard in the Sherman Oaks neighborhood of Los Angeles. In South Florida, the firm paid $124 million in 2020 for a pair of Miramar rental complexes at 11571 Canal Street and 11750 Canal Street. Ben Friedman is CEO of the East Region for Abacus, according to the firm’s website.
Rreef is not the only firm that invested in South Florida multifamily during the market bonanza of 2021 and 2022 and is now selling at a discount. The Federal Reserve’s aggressive interest rate hikes in 2022 and last year have posed a challenge for multifamily investors nationwide. Those with Florida holdings also face significant insurance premium increases.
Last year, Honolulu-based Shidler Group sold The Riverland Apartments at 420-432 Southwest 27th Avenue in Fort Lauderdale for $84 million, a 22 percent discount from the firm’s purchase price in 2022. Shidler’s original strategy was to sell quickly, but as a ground lease. Interest rate hikes foiled that plan, according to Andrew Gordon of Boston-based Stratford Management, one of the buyers.
Firms that aren’t selling also feel the squeeze. Last month, San Antonio, Texas-based Lynd put its investors in the Parc Place rental complex at 17600 Northwest Fifth Avenue in Miami Gardens on alert that the firm may issue a $9.1 million capital call to help continue property repairs and renovations. Lynd had paid $40.8 million for Parc Place in 2021, with plans to renovate the complex and increase its value. Since then, Parc Place’s insurance has skyrocketed 183 percent, and payroll has gone up 65 percent, eating up Lynd’s budget and preventing it from completing as many unit renovations as planned.
In July, Nuveen Real Estate sold an apartment complex in Plantation at a 5 percent discount from the firm’s purchase price a decade ago. Nuveen sold The Manor at 601 Northwest 82nd Avenue for $49.4 million.
