The 316-unit Park Colony apartment community west of the Orangebrook Golf & Country Club has sold for $41.5 million to a Canadian investor, according to Broward County property records.
A company managed by Andrew DeFrancesco, the founder, chairman and CEO of Fort Lauderdale-based private equity and merchant banking firm Delavaco Capital Inc., bought the complex at 812 S. Park Road. DeFrancesco-managed Park Colony LLC obtained a $31.79 million loan from Walker & Dunlop LLC for the acquisition.
The sale at about $131,000 per unit closed Tuesday and was recorded Thursday.
DeFrancesco’s firm owns a stake in major retailers American Apparel Inc. and Jamba Inc., which operates Jamba Juice. Delavaco, which is in the process of becoming publicly traded on the Toronto Stock Exchange, also has offices in Toronto and Bogota, Colombia.
Park Colony is the second South Florida apartment complex acquired by Delavaco. The firm paid $12.15 million for the Summerfield Apartments in Sunrise last September.
At the behest of family friend Dallas Wharton, DeFrancesco’s firm began investing in distressed South Florida single-family homes in 2010, DeFrancesco said in a phone interview Thursday. After starting small, DeFrancesco saw enough upside and capital market improvement to justify the acquisition of larger complexes.
"We didn’t want to go head-to-head with the big" real estate investment trusts, DeFrancesco said.
"Those guys are buying massive complexes and are not as sensitive to the yields and cap rates as we would be," he said. "We are really looking for complexes in the neighborhood of 100 to 250" units.
BRH Park Colony LLC, which is managed by Boston-based Berkshire Property Advisors LLC, is the seller. It paid $15.6 million in 1999 for the complex built in 1987.
Calls to Berkshire senior vice president Stephen Parthum, who signed the special warranty deed on behalf of the company, were not returned by deadline.
Park Colony is about 96 percent occupied, DeFrancesco said.
Berkshire originally had investment partners before taking complete ownership of Park Colony in 1999, according to Hampton Beebe, senior vice president in the Boca Raton office of ARA. He and ARA principal Avery Klann represented Berkshire in the sale.
Berkshire made significant renovations during its lengthy ownership, he said. That fueled investor interest in Park Colony, along with a lack of multifamily supply in Hollywood from last decade’s condominium conversion cycle.
"We had a huge turnout for this property," Beebe said. Berkshire "had done 75 percent of interior upgrades and were achieving healthy rent increases on the upgraded units."
DeFrancesco said his firm plans to upgrade the remaining 70 apartments that have not been improved.
Park Colony "fit the model of what we are looking to do," he said. "Occupancy is perfect, and the grounds are spectacular."
As reported in Thursday’s editions by the Daily Business Review, Hollywood is poised for significant development activity in the coming years.
Hollywood-based MG3 Developer Group LLC joined the growing field of builders with the announcement of two sizable projects. MG3 closed Feb. 7 on the $6.75 million acquisition of the site of the stalled Arts Park Village project in Hollywood’s Young Circle neighborhood from Lehman Brothers Holdings Inc. The site is approved for 390 residential units, 35,449 square feet of retail space and 52,500 square feet of office space, but MG3 has not finalized its plans.
The company also formed a joint venture with veteran Aventura-based home-builder Brookman-Fels Inc. to develop high-end single-family homes on 33 acres on Stirling Road between I-95 and Florida’s Turnpike. Plans called for construction of 90 single-family homes and 30 townhouses.