Meadow Brook Preserve, a 268-unit property in Naples, Florida, took a circuitous route to New York City-based Atlas Real Estate Partners along with Boca Raton-Florida-based Andover Real Estate Partners.
The property was developed in 1997 under the Low-Income Housing Tax Credit program. But it ran into problems during the Great Recession and was foreclosed upon in 2010. When that happened, it was removed from the LIHTC program and its income restrictions. Atlas Real Estate purchased it in 2012 for $22 million, according to Collier County, Florida, property records.
“We bought it at a really attractive basis in 2012,” said Joe Stampone, managing partner of investments with Atlas. “At the time, we were still coming out of the global financial crisis.”
In addition, Florida cities like Naples were in the early stages of a decade of major growth. “Naples was not the market that it is today,” Stampone said. “It was much more of a hospitality and leisure and retirement destination. The market has just matured dramatically over the 10 years that we held the asset.”
As Atlas held the investment, it renovated nearly 100% of Meadow Brook Preserve’s units. It also made extensive exterior upgrades, including a new façade and roofs and the addition of a dog park, pet washing station and outdoor kitchen and lounge area.
“The combination of executing our value-add business plan, along with the growth of that market, led to pretty astronomical rent and income growth,” Stampone said.
Atlas brought the property to market in early 2022, before the interest rate increases and volatility in the capital markets. It began to work on the purchase agreement around March, but it was an extended negotiation, according to Stampone.
“Over the course of that, obviously, we saw the world shift, and rates increase pretty dramatically,” Stampone said. “So that was something we had to manage through and I think ultimately it led to probably a slightly smaller buyer pool.”
When the Meadow Brook Preserve transaction finally closed in November, Atlas sold it for multiple times what it paid.
“Despite some of the interest rate volatility and maybe some of the uncertainty in the near term. I think what shone through was the quality of the asset, the fundamentals, which are still overwhelmingly positive in Naples and southwest Florida,” Stampone said.
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