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Deals & Dealmakers

Wharton Equity sells 900-unit Florida multifamily portfolio

Wharton Equity Partners announced the completion of the sale of a 900-unit portfolio in Central Florida it acquired with partners in 2012.

The sale caps off a productive 2016 for Wharton Equity in which the firm sold over $300 million of multifamily properties which it purchased over the last few years in partnership with institutional investors.

Photo by Jonathan Brown/ Flickr
Photo by Jonathan Brown/ Flickr

“Starting in 2012, we saw an opportunity to acquire properties in strong secondary markets, and purchased approximately 6,500 units during this time which we are now in the process of selling to recognize gains. To date, these sales have resulted in weighted average IRR’s well in excess of 20 percent,” noted Peter C. Lewis, President of Wharton Equity Partners.

The firm, founded in 1987, and with offices in New York City and Miami, has a history of acquiring real estate slightly ahead of the curve and then selling when the markets ripen.

“The driving investment philosophy of our firm for 30 years has been to capitalize on trends across all asset classes and strategies. Having been through a number of cycles, we felt strongly that multifamily assets would lead real estate out of the downturn, and decided to focus on secondary markets to reap the greatest arbitrage between cap rates and the cost of debt,” said Lewis.

The Florida portfolio is emblematic of Wharton Equity Partners’ investment style as the firm was presented with the transaction from a REIT when another buyer dropped out of contract and moved quickly to acquire the assets in conjunction with a New York City hedge fund and property management firm.

After adding value through improved operations, and upgrades the partnership was able to raise income and sell the properties at a substantial gain.

“Although the environment has gotten more challenging, we believe there are still opportunities to purchase properties today and are actively looking for assets, particularly those catering to workforce housing,” added Lewis.

Along these lines, the company is about to close on a multifamily property in Nashville, TN that it is acquiring from the original developer.

“This is exactly the type of property we want to be purchasing right now where we can completely transform an asset, located in a burgeoning market, which caters to middle income families.

“Within the next six months, we will expand our sights to include Class A properties in strong markets where we believe there will be downward pressure on pricing due to softening from over-building. This is in addition to our development activities, mostly in Florida and New York,” Lewis added.

In December 2016, the firm acquired a two-acre property in the Bay Harbor/Bal Harbour sub-market in partnership with Northwood Ravin Investors where it plans on developing a mixed use project comprised of residential rentals, office and retail.

The site, at 1177 Kane Concourse, encompasses 1.82 acres of mostly vacant land and a surface parking lot, with an existing, 21,078 s/f, three-story office building built in 1953.

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