Wharton Equity Partners Acquires 500-Unit Florida Multi-Family Portfolio for $50M
By Barbra Murray, Contributing Editor
Talk about a growth spurt. In April, Wharton Equity Partners L.L.C. kicked off its multi-family strategy by snapping up nearly 600 units in Chicago, and now the diversified investment firm has just increased its holdings by an additional 900 units with the purchase of a stake in four properties in Central Florida. Wharton Equity, which partnered with a consortium of real estate funds affiliated with Och-Ziff Capital Management Group L.L.C. on the portfolio purchase, shelled out $50 million for its interest in the group of multi-family assets.
The properties, which have benefited from an aggregate $12 million in capital improvements over the last few years, are located in tightening submarkets of Tampa and Orlando. “We are really big believers in quality of life, communities where housing is affordable,” Peter Lewis, chairman and president of Wharton Equity, told Commercial Property Executive. “We’re big believers in Tampa and Orlando.” The portfolio of apartment communities has an average occupancy level of approximately 90 percent and will be managed by Cocke Finkelstein Inc., which also claimed a stake in the assets with its participation in the transaction. Debt financing for the deal was provided through Freddie Mac.
As Wharton moves forward with building up a strong multi-family presence, the company is being very careful about where it places its faith, focusing solely on certain areas in secondary markets. “We really do like the Southeast, in particular markets like Savannah, [Georgia,] which we think in the years ahead is going to benefit from the increase in trade through the expansion of the Panama Canal,” said Lewis. “And the same goes for markets like Charleston, [South Carolina], which will also see that trend.”
Raleigh, N.C., is also in Wharton Equity’s sights, as is Minneapolis, where a thriving medical device industry and a diversified economy are bolstering rentals. In the first quarter, the city’s apartment market basked in its vacancy rate of 2.5 percent, a 10-year low, according to a report by Marcus & Millichap Real Estate Investment Services.
Places like Lexington, Ky., may not be high on other investors’ radar, but Wharton is attracted to the city given that the apartment market is improving along with the growth of healthcare facilities at the University of Kentucky and the sprouting up of supporting businesses.
“The common thread among everything we do is that we really look for cities that we see will be thriving in the future that are not the obvious ones,” Lewis noted. “New York is going to continue to attract its share of people, so will Washington, D.C., Boston. We’re looking for markets that are smaller markets that have real, genuine reasons for growing.”