UPDATED, April 21, 6:15 p.m.: A pair of waterfront Normandy Isle apartment complexes traded — one as a potential development site — for a combined $22.2 million in two deals involving different buyers. Both properties are two-story, garden-style buildings on Bay Drive in Miami Beach.
Pierre on the Bay
Magnum Holding Company, a U.S. subsidiary of Montreal-based family-owned real investment firm Trams Property Management, paid $15.2 million for the 70-unit Pierre on the Bay at 2050 Bay Drive and an adjacent vacant lot at 2095 Bay Drive, according to a press release.
The sale breaks down to $198,571 per apartment.
Shelly Argy and Ryan Shaw with Marcus & Millichap represented the seller, and Jonathan Kotler with Keller Williams represented the buyer.
The seller, an affiliate of Aventura-based Gulf Group Holdings, led by Jonathan Politano, bought the Pierre on the Bay and the vacant lot for $7.3 million in 2019, according to records. Now, three years later, Politano’s affiliate sold the properties for more than double the purchase price. The two apartment buildings were completed in 1951, records show.
A Marcus & Millichap spokesperson said via email that the apartment complex can be redeveloped into a five-story, 44,256-square-foot residential building under the current zoning, however the buyer doesn’t have plans to redevelop the property at this time. Politano had previously indicated that he eventually planned to build condos on the site.
Pierre on the Bay is 61 percent occupied, with monthly rents averaging $1,090, the spokesperson said. The apartment complex and the vacant lot were listed in June with an asking price of $15 million.
In a statement, Argy said Pierre on the Bay attracted interest from developers and multifamily investors. The property has panoramic views of Biscayne Bay and direct water frontage of the 79th Street Causeway.
A local company affiliated with Gustaf Arnoldsson, CFO of Miami-based hospitality property investor SMS Lodging, bought Normandy Villas, a 22-unit apartment complex at 946 and 950 Bay Drive for $6.4 million, according to the seller’s broker, Joseph Thomas.
Arnoldsson’s company paid $290,090 per apartment.
Thomas and Adam Duncan led a Marcus & Millichap team in brokering the off-market deal.
The seller, Chehebar Brothers B LLC, managed by Rafael Chehebar of Miami Beach, paid $2.5 million for Normandy Villas in 2010, records show. The two buildings were completed in 1944 and 1955.
Normandy Villas features one- and two-bedroom apartments, but none are currently available, according to Apartments.com.
Thomas told The Real Deal that monthly rents at Normandy Villas average about $1,700. “That’s a little under $2 a square foot,” Thomas said. “The buyer is projecting [new rents] in the mid-to-upper $2 a square foot.”
Arnoldsson’s entity doesn’t intend to redevelop the apartment complex in the near future, Thomas said. “They are just planning on operating the property as a high-rent, quasi-luxury property post-renovation, and keep it as a cash-flowing apartment building,” he said. “They are planning on cleaning up and doing cosmetic enhancements to the property in order to achieve the market rents that are available today.”
Investors remain bullish for South Florida multifamily properties, especially in nearby Miami where tenant demand led the U.S. in rent hikes during the pandemic. Since March 2020, Miami’s median apartment rent spiked 58 percent to $2,988 per month, according to a Realtor.com report.
But some investors are looking at redeveloping older South Florida apartment buildings into new condos. Another Canadian company, Camaco, recently paid $9.3 million for the 23-unit Stratford Apartments in Pompano Beach. Camaco submitted preliminary plans to the city of Pompano Beach to redevelop the property into a boutique condominium called Entourage Under The Sun.