Covenant bets on Margate multifamily with $61M deal

A Nashville-based multifamily real estate firm scooped up an older apartment complex in suburban Broward County for $60.9 million.

Covenant Capital Group, through an affiliate, bought the Blue Isle community at 5100 West Sample Road in Margate from an entity tied to Ontario-based Morguard Corporation, according to records. Covenant Capital borrowed $60 million from Pinnacle Bank.

The deal for the 340-unit Blue Isle breaks down to $179,000 per apartment.

The garden-style community was built in 1988 on 21 acres, property records show. Blue Isle offers one-bedroom and two-bedroom apartments with monthly rents starting at $1,768 and $2,174, respectively, according to its website.

A deed shows Morguard bought the community in 2012 for $40 million. This means the recent deal marked a 52 percent appreciation in the property’s value in 10 years.

Publicly traded Morguard, led by K. Rai Sahi, has $19.4 billion in assets owned and under management throughout North America, according to its website. The firm has three main investment arms: It owns and manages real estate across asset classes; sponsors the real estate investment trusts Morguard REIT and Morguard North American Residential REIT; and offers real estate advisory and portfolio management services.

Its other apartment properties in South Florida include Vizcaya Lakes at Renaissance Commons at 1645 Renaissance Commons Boulevard in Boynton Beach. Morguard bought it in 2018 for $48.5 million. 

This year, it has ramped up its investments in Los Angeles and Chicago. Morguard assumed full ownership of a Hollywood apartment tower in February by buying out its partners’ 40.9 percent stake in the property for $79.4 million. In Chicago’s Fulton River District, Morguard bought the Echelon Chicago apartment tower for $133 million in August.

Covenant Capital, led by Frederic Scarola and Govan White, has $1.2 billion of assets under management, according to its website.

In August, Covenant bought the 8800 Lakeside apartment complex at 8800 Northwest 78th Court in Tamarac for $69 million.

Covenant isn’t the only out-of-state firm to bet on older South Florida multifamily properties.

This month, Cochise Capital bought a 90-unit portfolio of rentals built in 1964 and 1967 in Fort Lauderdale. The Los Angeles-based firm paid $29.6 million for the Cordova Arms building at 1401 Southeast 15th Street and The Isle at 1300 Northeast Third Street.

In another Margate apartment deal, San Antonio, Texas-based Lynd Living flipped the Arium Coconut Creek at 5750 Lakeside Drive in November of last year for $66.5 million. The sale marked a $15.75 million or 31 percent gain over Lynd’s purchase price eight months earlier.