Condo conversion deal may be state's largest
Posted on Fri, Feb. 17, 2006
MCZ/Centrum will close on a more than $600 million deal with AIMCO to purchase the Flamingo South Beach apartment complex and turn the property into condos.
The Flamingo South Beach, a massive apartment complex in Miami Beach, is set to be sold and turned into condominiums, in a deal that appears to be the biggest condo conversion ever in Florida -- and possibly the country.
MCZ/Centrum, a joint venture group based in Chicago, will pay more than $600 million for the 1,688-unit apartment complex that sits on 13 acres along Biscayne Bay. The property is being sold by AIMCO, a publicly-traded apartment company in Denver. The parties reached agreement Thursday and are expected to close today. The purchase suggests that the Chicago condo converters remain bullish on South Florida's condo market. But it also comes at time when prices appear to be leveling after hitting new highs last year.
Under the terms of the deal, the Bay Road property will be bought in phases, with the south tower converted to condominiums first, followed by the north and center towers. Miami-based Fortune International is slated to sell the units, which must be first offered to existing renters.
Judy Stowell, AIMCO's director of public relations, did not return calls Thursday. Earlier in the week she said the company does not comment until a deal is complete.
Principals at MCZ/Centrum either declined comment or could not be reached. Jay Massirman, the CB Richard Ellis vice chairman who is brokering the deal, also declined comment.
`HIGHEST SALE PRICE'
Amid South Florida's housing boom, developers have bought rental apartments and turned them into condos at a furious pace. But market observers said they do not recall any condo conversion with such a hefty price tag.
''To my knowledge, at more than $600 million it would be the highest sale price for an apartment in the state of Florida and possibly the country,'' said veteran real estate analyst Michael Cannon, managing director of Integra Realty Resources in Miami.
Cannon also said it would be the largest apartment complex in Florida to be turned into condos.
Across South Florida, developers have sought to take advantage of strong -- at times, frenzied -- demand for condos by converting apartments into condos. Such a scenario allows developers to avoid the headaches of actually erecting a new building. It also allows buyers to purchase and move into a unit faster than the roughly two years it takes for a new condo to be built.
In 2005 alone, more than 10,000 apartments were converted to condos in Broward County. In Miami-Dade conversions have so diminished the rental stock that it would take an additional 3,000 new rental units each year for the next five years to replenish inventory to its 2002 levels, according to Marcus & Millichap's 2006 National Apartment Report.
Of course, many conversion buyers are investors who immediately rent the units again. This has started to fragment the rental market from large landlords to numerous individual landlords. But the Marcus & Millichap report said it's uncertain if enough individually-owned units are resurfacing on the market as rentals to be a big factor in the rental market.