Sternlicht’s Starwood makes Lantana affordable housing play

Seller flipped the complex for a 62% gain in five months

Starwood Capital Group's Barry Sternlicht and Villas at the Cove Crossing at 2738 Lantana Road and 2735 Donnelly Drive in Lantana (Getty Images, Google Maps)
Starwood Capital Group's Barry Sternlicht and Villas at the Cove Crossing at 2738 Lantana Road and 2735 Donnelly Drive in Lantana (Getty Images, Google Maps)

Barry Sternlicht’s Starwood Capital Group scooped up an affordable housing complex near Lantana, adding to its portfolio of low-income rentals in Palm Beach County.

Starwood, through an affiliate, bought the 94-unit Villas at the Cove Crossing at 2738 Lantana Road and 2735 Donnelly Drive for $16 million from an entity tied to Equity Management Partners, according to records. The buyer borrowed $11.1 million for the purchase from CBRE Capital Markets.

The apartment complex, built in 1996 on nearly 8 acres, consists of four buildings at 2738 Lantana Road, which are on the north side of a canal from two buildings at 2735 Donnelly Drive, property records show.

The deal breaks down to $170,000 a unit.

Records show Equity Management purchased Villas at the Cove in March for $9.9 million, meaning the firm flipped the property for a 62 percent gain in five months. Led by Benjamin Mallah, Equity Management is a property management firm based in Largo, on Florida’s west coast, according to the company’s website.

In December, Starwood paid $176.4 million for several affordable housing complexes at 101 Pine Circuit in Greenacres, and at 8215 Belvedere Road, and 301 and 303 North Congress Avenue in West Palm Beach.

Sign Up for the undefined Newsletter

The properties, which total 740 units, traded for $238,000 per apartment.

Miami Beach-based Starwood also has been disposing of some of its South Florida holdings this year. It sold the Plantation medical office building at 8100 Southwest 10th Street for $45.5 million in July, and the Westland Mall at 1675 West 49th Street in Hialeah in January. Centennial acquired the mall by assuming Starwood’s $149.4 million mortgage on the property.

Affordable housing has caught investors and developers’ interest, as they are likely betting on demand for below-market rate apartments. South Florida is seeing a cooling of unprecedented rent hikes experienced over the past two years, but it still leads the nation in annual increases.

The area’s median rent jumped 26 percent in June, year-over-year, to $2,840 a month, according to Realtor.com.

In North Miami, Coral Rock Development Group plans the 10-story, 138-unit Kayla at Library Place apartment building with affordable and workforce units.

In July, Jon Paul Pérez and Jorge Pérez’s Related Group paid $48 million for the income-restricted Boynton Beach apartment complex on the southwest corner of Northeast Fourth Street and Northeast 20th Avenue.