CASE STUDY

Azul Apartments Stuart

Multifamily
New Construction
Stuart, FL

ONE Commercial Real Estate was exclusively retained by developers, New Urban Community, to arrange for the sale of Azul Stuart, a multi-family building comprised of forty-nine newly-constructed units. Azul was the first newly-constructed multi-family property located in downtown Stuart in decades. We were entrusted with selling the property at a premium price.
The purpose of this case study is to highlight the challenges presented in this assignment, as well as the solutions that ultimately led to a successful property sale.

The Challenges
The Solutions
The Results

Project Summary

Address

201 SW Joan Jefferson Way, Stuart, FL 34994
Seller/Developer

New Urban Communities
Buyer

DiversyFund
Assignment

Exclusively Represent Seller

Aerial Tour

A view of Azul Stuart from above

Property Highlights

deal highlights

No seller concessions made during contracted period. Multiple offers were presented.

Challenges

Fear and uncertainty in all sectors, particularly commercial real estate, resulted in many prospective buyers presenting lower than acceptable offers.

ONE Commercial Real Estate facilitates the optimal outcome for owners, occupiers, and developers in commercial real estate. We connect intelligence with experience, knowledge, and technical skills to deliver better and faster executions for clients. Like all assignments, Azul Apartments presented a unique set of challenges.

We began marketing the asset during its lease-up period, at 59.2% occupancy in February 2020. This coincided with the first cases of the rapidly-spreading Covid-19 virus being detected in the United States. Fear and uncertainty in all sectors, particularly commercial real estate, resulted in many prospective buyers presenting lower than acceptable offers.

The property was on a 99-year ground lease with the City of Stuart. This was a net land lease, which required the Lessee to pay insurance, taxes, and maintain the property. Due to this arrangement, many prospective buyers, looking for a more traditional fee simple multi-family asset, were deterred from making offers.

ONE Commercial received multiple competing offers on the asset from institutional level investors, REITs, and family offices.

For the duration of Azul being marketed, occupancy rates rose from 59.2% to a stabilized 98% at closing. Steady leasing activity and reaching our pro forma rental rates ultimately fueled further interest with more serious offers in line with our valuation being presented.

While the property being encumbered by a ground lease deterred some prospective buyers, it also allowed the developers to offer the property at a stronger cap rate in place, as they did not have to factor in the cost of the land.

Ultimately, Azul Stuart appealed to a diverse group of investors for several reasons; it was a boutique development featuring high quality construction and finishes located in a unique, growing downtown community. These attractive qualities translated to significant upside potential for rental rates. ONE Commercial received multiple competing offers on the asset from institutional level investors, REITs, and family offices.

Results

ONE Commercial Real Estate was successful in arranging the sale of Azul Stuart, finding solutions for the many challenges presented. Azul Stuart sold to DiversyFund, a REIT based out of San Diego, California for $15,500,000 ($475.80 PSF). The property was at 98% occupancy upon closing, reaching 100% shortly thereafter.

Months to Sale

$15.5M

Sale Price

$475.80

PPSF

5.30%

Cap Rate

98%

Occupancy at Close

Months to Sale

$15.5M

Sale Price

$475.80

PPSF

5.30%

Cap Rate

98%

Occupancy at Close

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