Dive Brief:

• Fort Lauderdale, Florida-based apartment owner Southeast Property Group acquired a troubled two-property, 328-unit apartment portfolio in Jacksonville, Florida, for $20.3 million from New York City-based owner the Chetrit Group on March 1.
• The purchase of the two properties — Colonial Forest and Northwood Apartments — marks Southeast Property Group’s entrance into Jacksonville. Southeast Property Group Principal Joe Rubin said his firm acquired both properties at “below market pricing,” according to a news release announcing the purchases. 
• The Chetrit Group, led by Joseph Chetrit, acquired the 8,671-unit, 43-property portfolio containing the two properties in 2019 from Bloomfield Hills, Michigan-based Roco Real Estate, according to Crain’s Detroit Business. It financed the acquisitions with a commercial mortgage-backed securities loan from JPMorgan Chase. The $481 million loan backing the assets went into special servicing for default in November 2022, leading the company to take steps to reduce debt, according to Trepp.

Dive Insight:

Rubin said his firm acquired Colonial Forest and Northwood Apartments through an off-market brokerage relationship. 

“It was a very unfortunate situation, but thanks to our capital partners, we stand ready with plenty of dry powder to provide capital and expertise in these exact scenarios," said Southeast Property Group Principal Richard Shuster in the press release.

Commercial real estate services firm Berkadia South Florida secured a $21.15 million bridge loan for Southeast Property Group through Wilmington, Delaware-based payment services provider and specialized lender The Bancorp. The fixed-rate, three-year loan includes $9.6 million for future capital expenditures, according to the Berkadia release. 

“In this particular instance, the buyer is a group that is hands-on and not afraid to get in the trenches, so they felt there was a lot of opportunity here that steered many potential other buyers away,” Matt Robbins, a managing director at Berkadia, told Multifamily Dive.

Although Robbins called the Chetrit sales a “unique situation,” he said he wouldn’t be surprised to see more troubled properties come to market. “There may be more distressed opportunities in Florida as some of these over-levered bridge loans, most of which were originated three years ago, need to pass their extension tests in the second half of this year,” he said.

Renovation plans

Due to the distressed nature of the properties, Southeast Property Group intends to rebrand Colonial Forest and Northwood Apartments as The Belmont and Avenue at 1601, respectively. 

Colonial Forest, built in 1969, is a gated community with one-, two- and three-bedroom homes that feature, large walk-in closets, ceiling fans, ceramic tile and private patios/balconies. Its amenities include a swimming pool, picnic area, playground, laundry facility and carports. 

Northwood Apartments, built in 1975, features one-, two- and three-bedroom apartments with new appliances and cabinetry and walk-in closets. Its amenities include a swimming pool and complimentary parking.

Southeast Property Group has already begun a $9.7 million renovation program, including new roofs, exterior paint, re-plumbing, amenity and landscape upgrades and updates to all apartment unit interiors.

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