American Landmark met its 2018 goal of buying $1.5 billion worth of apartment communities. This year, it's being even more ambitious, aiming for $2 billion in acquisitions and it's already halfway there.

The latest acquisition pushing American Landmark closer to its goal is a 448-unit apartment complex west of Boca Raton purchased for $91.5 million May 29. The deal breaks down to $204,241 per unit.

The Tampa-based owner and operator of multifamily communities bought Cielo Boca from Dallas-based Mill Creek Residential Trust LLC, which develops, buys and operates apartment communities in the U.S.

“We continue to see very strong interest in garden-style assets in the western suburbs that are ripe for value-add renovation,” said Avery Klann, who was part of the Newmark Knight Frank multifamily team that closed this transaction.

Klann, a vice chairman, worked with Hampton Beebe, also a vice chairman, and director Jonathan Senn to sell the property on behalf of Mill Creek. The three are based in Boca Raton.

Cielo Boca, which has been rebranded several times most recently from Alister Boca Raton, is at 10235 Boca Entrada Blvd. just west of U.S. 441.

The value-add opportunities apply to both American Landmark and Mill Creek. For one, Cielo Boca was built from 1986 to 1988, which sets it up to achieve a higher value and higher rents after renovation.

American Landmark plans to pump $6.2 million into capital improvements, continuing what Mill Creek started.

Mill Creek used an affiliate to buy the property in 2016 for $70.85 million when it was called Emerald Bay Club. It invested $4 million to renovate common areas such as the pool, clubhouse and landscaping as well as 30% of the units.

Why only renovate about a third of the units?

It's a strategy some real estate investors employ to demonstrate to other investors that the property has upside potential.

“Their business plan was to really implement a rehab for a portion of the units. In this instance, it was approximately 30% to prove out the renovation strategy and then ultimately sell the asset to another buyer who would continue the renovation,” Klann said. ”They were able to demonstrate the upside to the market.”

Cielo Boca generated a healthy interest as Klann and his team led 20 property tours and received 10 offers.

Cielo Boca offers one-, two- and three-bedroom units. A 704-square-foot one bedroom costs $1,273 a month, two bedrooms are in the $1,500s, and three bedrooms rent in the low to mid $1,800s, according to the property's website.

Cielo Boca was 96% occupied at the time of sale. That's no surprise given the tight South Florida multifamily market and healthy fundamentals for the sector nationally.

In South Florida, demand for apartments is fed by job and population growth. Also, the high prices for condominiums and single-family homes have made buying prohibitive for many, while for others renting is a lifestyle choice.

All of those factors support American Landmark's acquisition strategy. The company soon will be closing on a Texas portfolio and recently purchased a Jacksonville property.

“We achieved our goal of $1.5 billion in acquisitions in 2018, capping off a successful year that exemplifies our strength at identifying off-market opportunities and executing quickly,” CEO Joe Lubeck said in a February news release. “We intend to stay the course in 2019 and continue to focus on Sun Belt cities where job and population growth remains healthy and the demand for workforce apartments, particularly Class A-minus and B product, is incredibly strong.”

American Landmark has 26,000 units in its portfolio with 23 of its properties in Florida and seven of them in South Florida. It also has properties in the Southeast U.S. and Texas.

Attorney Michael Denberg, managing partner at Saul Ewing Arnstein & Lehr in Fort Lauderdale, has represented American Landmark on all of its multifamily acquisitions last year and this year.

As for Newmark Knight Frank, this wasn't the first time it traded Cielo Boca. It represented the seller, Emerald Bay Club LP, when it sold to Mill Creek.

In the latest deal, Newmark Knight Frank played another role as well. Managing director Matthew Mense, based in Bethesda, Maryland, secured a $64.96 million acquisition loan from Freddie Mac on behalf of American Landmark.

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