We are really excited to kickoff the new year with a beautiful deal in a really phenomenal market. With the economy a little unknown at the moment, we're staying focused on the best markets with the best deals. And I think we're going to look back in a couple years and be extremely glad we made this decision to break ground in St Pete.
220 Class A Units, Full Amenities, Structured Parking
Resilient Market with Strong Fundamentals
Amazing Location with Great Walkability
17 Minutes to the #1 Beach in America
As always, please don't hesitate to reach out with any questions on the deal. Links to the webinar recording, slide deck, and promo video are below.
A couple of months ago we purchased two lots in downtown St Petersburg, FL with the intention of wrapping up final zoning/permitting and then bringing you a new opportunity. St Pete is a market I never thought we would ever own in because it's so overpriced to buy existing product. These two lots were off-market relationship-driven opportunities and we've got some nice built-in equity already. It's really the only way to get into a Class-A product in this area at a reasonable basis with the potential for some serious post-stabilization cash flow. We are pumped.
Not to mention, St Pete is in the midst of a decades-long downtown renaissance and has become one of the nicest truly live/work/play towns in the country. The demographics are great and the population growth just keeps on chugging. We also think timing is good because our expectation is that we'll be coming to market towards the end of this current "correction" in the economy and should have a nice tailwind to give us an additional boost as rents continue rise and rates go down at some point. That will give us upside on the NOI and a nice bump on the refinance cash flow position.
Last but not least, we purchased our land at $50k/door. A couple nearby lots just traded at $100k/door. I'll take a 2X $11MM equity bump before we even break ground!
Video introduction
Nothing beats being able to see the property and it's surrounding areas. Here we have put together a nice video showing some of the highlights of the area.
St Pete Portfolio Webinar Replay
If you didn't get the chance to see the live webinar, here's the replay.
Slide Deck
All the details of the deal that we covered last night are here for your reference.
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I always like to keep track of the markets we're invested in and have been doing some ongoing research in the Tampa/St Pete market. Figured it might be helpful as you're faced with a million sound bites about our current economic situation.
Net in-migration to Tampa is outpacing all other Florida metros, resulting in historic levels of renter demand, which is placing significant upward pressure on housing costs. Since 2019, the average effective rent has risen nearly 43 percent, a growth rate that leads all major markets in the nation. I think this will stabilize but with all the population growth it's no guarantee. We're modeling about 1/4 of that growth. With a median household income nearly 14 percent below the national mean, many long-term residents are seeking lower-cost units to cut down on expenses amid widespread inflation. This was a factor behind vacancy in both Class A and B properties increasing by 60 basis points over the past year. And this is a key component of the data behind our thesis for providing smaller units at a 20-30% lower price point! Even with the slight uptick in vacancy, however, availability in these property tiers remains well below historical norms. Meanwhile, job creation and recruiting efforts in higher-paying industries should attract new Class A and B renters to the market.
The Tampa/St Pete market added over 60,000 jobs in the past year, putting downward pressure on the unemployment rate such that employers are being forced to look outside the bay area to attract workers. The only way to support the growth in this market is by bringing folks in from outside. For us, this is another very compelling data point that we believe supports our curated, Class-A value product in the market. Average price points for Class-A product is mid-$300s while we're coming in at around $265k/unit. Basis is important - even in Class-A.
REM Capital LLC, 1201 6th Ave W, Ste 100, Bradenton, FL 34205, United States, 941-225-8481
