At another point in time, a property like The Pointe on Westshore would have generated massive bidding wars.
The 444-unit waterfront asset, built in 2021, sits on 23 acres adjacent to south Tampa’s new Westshore Marina District. It consists of 13 five-story apartment buildings in addition to two-story townhomes. The property offers one-, two- and three-bedroom floor plans with views of Tampa Bay, stainless steel appliances, quartz countertops and frameless glass shower doors, according to a press release.
But events of the last couple of years have made owning an asset like The Pointe on Westshore much more expensive. In addition to interest rate increases, property taxes have skyrocketed in Florida, and waterfront properties are uniquely affected.
Toronto-based professional services and investment management company Colliers first brought the property to market in July 2023 for Jupiter, Florida-based commercial real estate owner and developer Index Investment Group, which was facing a loan maturity.
“This deal, in many respects, was the type of deal that we've all been reading about in the sense that the seller really didn't want to sell it,” Casey Babb, executive vice president of multifamily investments at Colliers, told Multifamily Dive. “He knew that the value was going to ultimately go up over time. But he had a loan, a very large one, breathing down his neck.”
Insurance obstacles
But even with that motivation, a 150-basis-point interest rate spike forced Index and Colliers to pull the asset off the market. It relaunched the listing in December, receiving roughly 30 bids, according to Babb.
“The volatility in the market when it comes to interest rates has been very difficult,” Babb said. “But we were able to find American Landmark. They've got 35,000 apartments literally across the Sun Belt. So they were able to underwrite the insurance to a much lower number than the rest of the market.”
With multiple buildings, the insurance costs for The Pointe on Westshore were “astronomically high,” according to Babb. Some bidders were getting quoted prices as high as $3,500 a unit. However, Tampa-based owner American Landmark was able to insure the property at $2,000 a unit under its umbrella policy, giving it an extra $8 million to $10 million of value.
“We have some proprietary strategies to cover all our real estate assets at fair prices, even in Florida and Texas,” American Landmark CEO Joe Lubeck told Multifamily Dive.
With insurance covered, American Landmark was able to buy The Pointe on Westshore at 15% below the marketed price, according to Lubeck. “It is a great asset, great location and reduced price,” he said.
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