20th Annual BAAA Developers Forum
Existing Apartment Sales Update
Presented by: Darron Kattan
Darron Kattan Bio
With career closings exceeding $1.5 billion, Darron Kattan, Managing Director and a multifamily brokerage specialist, focuses on properties in Central, West Central, and Southwest Florida. He has been hired by private clients with large portfolios, single properties, institutional owners, national lenders, community banks, and servicing companies of all sizes. Mr. Kattan has experience with Class A, B, and C properties as well as affordable low-income housing tax credit (LIHTC) and housing and urban development (HUD) transactions. Prior to joining Franklin Street in 2008‚ Mr. Kattan was Vice President/Investments at Marcus and Millichap for nine years. His impressive sales record has been recognized with the following Franklin Street awards: 2009 - 2014 Sales Achievement Award winner, 2010 overall company Top Earner. He was named a 2013 40 Under 40 Professional by Real Estate Forum. Mr. Kattan is also an active member of Florida University’s Bergstrom Council in Tampa, the Real Estate Investment Council (REIC), and National Multi Housing Council (NMHC). Mr. Kattan graduated from the University of Florida with a Bachelor of Science in Public Relations and is a licensed real estate broker in Florida, Georgia, Alabama, Mississippi, North Carolina, and South Carolina.
About Franklin Street
About Franklin Street
Topics
• Stats- Boring but Insightful Metrics• Cycle Factors- This Time Its No Different• Lenders- Wall Street Returns• Buyers- Spike the Punch Bowl• Case Studies- How Did that Happen• Future- Not So Bold Predictions
Price Per Unit (2003-2014)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
10000
20000
30000
40000
50000
60000
70000
80000
90000
Source: Costar – Multifamily Sales 50+ Units, Tampa Bay MSA
$82.5k/unit $85.6k/unit
Price Per Square Foot (2003-2014)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140
20
40
60
80
100
Source: Costar – Multifamily Sales 50+ Units, Tampa Bay MSA
$90.73/ft$96.72/ft
Price Per Unit (By Decade Built)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
60's
70's
80's
90's
00's
Peak Year
Trough
Year
Average Price/Unit
60's Build $62,451
70's Build $50,962
80's Build $59,847
90's Build $94,5992000's Build $108,538
Source: Costar – Multifamily Sales 50+ Units, Tampa Bay MSA
Price Per SF (By Decade Built)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014$0
$20
$40
$60
$80
$100
$120
$140
$160
60's
70's
80's
90's
00's
Trough
Year
Peak Year
Average Price/SF60's Build $67.9670's Build $59.0980's Build $69.5490's Build $88.91
2000's Build $95.24
Source: Costar – Multifamily Sales 50+ Units, Tampa Bay MSA
Cycle Factors- This Time Its No Different
• Supply & Demand– Inventory– Buyers– Lenders
• Global, Political & Economy Related– Jobs– Growth– Recessions- Global and National– Regulatory– Regime Stability/Instability– Interest Rates
Lenders- Wall Street Returns
New lenders every day. In 2008 couldn’t find more than a handful of lenders, now there are many options
• CMBS• Agency (full term IO)• Non Recourse• Balance Sheet & Bridge• Recapitalizations are Up Significantly
Leveraged buying power moving up so fast its creating new wealth out of thin air.
Buyers- Spike the Punch Bowl
Old Timers
Fast Moving Smart Money
New Syndicators
Experienced Syndicators
First Timers, Out of Area Buyers, Foreign Money, OPM With No Conscience
Banks & Servicing Companies
“Bartenders”
Buyers- Spike the Punch Bowl
• How Do You Identify?• Who do you Align Yourself With?• How Long Does it Peak, How Hard Does it
Fall?– Replace the old adage of location, location,
location with timing, leverage, location
Case Studies- How Did that Happen
• Avesta Portfolio– 13 Properties, 2199 Units. Central/West Florida– Closing Price $81,363,000 ($37k/unit)– Cap Rate with Adjusted Taxes, T12 Income- 6%– Overall C Class Portfolio– South Florida Based Syndicator– CMBS 1st Debt– Preferred Equity from Multiple Sources Including
Foreign Capital– Stable Assets, Buyer Perceived Value Add Through
Management Efficiencies and Increasing Rents
Case Studies- How Did that Happen
• Sandanay & Stonehenge– 100 Units, Tampa– Closing Price $3,050,000 ($30k/unit)– Cap Rate with Adjusted Taxes, Normalized Expenses
and T12 Income - 7%– C Class Deal, Needed Rehab– Foreign Buyer– Low Leverage, Non-Recourse Loan– Buyer looking for price per pound, place to park
money, economies of scale with other recent purchases (4th acquisition in Tampa)
Case Studies- How Did that Happen
• Windemere– 180 Units Dunedin– Closing Price $10,000,000 ($55k/unit)– Cap Rate With Adjusted Taxes and T12
Income- 4.5%– C Class Deal, A Class Location– Local Buyer, Out of Area Equity– Massive Rehab, Solid Property with 20+ Year
Owner
Future- Not So Bold Predictions
• Crash will be 2018• Unanticipated Cause—Not Interest Rates• Wall Street Will Be Involved
And finally, someday I will likely go back to just being a bartender. When that happens, drinks are on me!
Contact Information
Darron Kattan
Managing Director
Franklin Street Real Estate Services
500 N. Westshore Blvd.
Suite 750
Tampa, FL 33609
Direct: 813.658.3355
Cell: 813.477.1993