3333 Duck Ave.
3333 Duck Ave. (Google Earth)

In what appears to be the second-largest real estate deal of the year in the Florida Keys, a joint venture led by Miami Beach investor Mast Capital Inc. has scooped up a 192-unit apartment complex for $39.5 million.

In a joint venture with Boston-based Rockpoint Group LLC, Mast purchased the West Isle Club apartments at 3333 Duck Ave. in Key West. The property includes 147,707 square feet of living space on 6.24 acres and last traded in April 1988 for $10 million. The transaction closed Wednesday.

Mast chief executive Camilo Miguel Jr. said the property is fully occupied and is one of only three professionally managed rental apartment properties in Key West. Mast is looking to hold the real estate and increase rents to improve the return on its investment. An April analysis by broker HFF said average rents at West Isle are just shy of $1,850 per month, which would imply a relatively high gross rent multiplier of 9.27.

“If you’re 100 percent occupied, your rents are too low,” Miguel said. He said the joint venture would seek to improve “the overall aesthetics and lifestyle that the residents have, which in turn will help drive up rents.”

Miguel said a booming hospitality industry in the Florida Keys “is poised to keep going for a long time,” keeping the unemployment rate low and further putting demographic demand on housing. Coupled with strict limits on development, that could help drive a market that supports higher rents.

The deal for the complex was conducted off-market and came out of a relationship one of the Mast Capital team members had with the seller, Miguel said. Mast first approached the deal about nine months ago and then again last month.

Chasing off-market opportunities involving revenue-rich assets in markets with tight supply has become somewhat of a niche strategy for Mast. In April, the company partnered with two other private equity firms to buy 2699 S. Bayshore Drive in Miami, a nine-story office building in the heart of Coconut Grove with unobstructed views of Biscayne Bay.

The company also is working on a residential development in Miami Beach’s SoFi neighborhood and a commercial project in the Brickell financial district.

As for the Key West deal, Monroe County records show it would be the one of the biggest deals in the city this year, second only to the $100 million sale of the Parrot Key Hotel and Resort in May.