Camilo Miguel Jr., CEO and Founder of Mast Capital, in Miami. (Courtesy photo)
It took less than three years for Camilo Miguel Jr. and his partners to execute their business plan when it came to turning around a Key West property.
They had renovated 95 percent of the 297-unit Ocean Walk Apartments on the ocean side of the resort island at 3900 S. Roosevelt Blvd. and raised rents to reposition the property as a Class A asset.
“We saw an opportunity in the market to achieve the exit evaluation that we were anticipating and ended up outperforming that as well,” said Miguel, founder and CEO of Miami-based investment and development company Mast Capital, which along with Boston-based real estate private equity firm Rockpoint Group sold the property for $101.5 million to Irvine, California-based Passco Cos.
Ocean Walk was built in 1989 on more than 17 acres and is one of just a handful of institutional-level rental properties in the Keys. The property was purchased by the joint venture in September 2014 for over $75 million, according to property records. The sale represents a 35 percent gain and an impressive sales price of $341,751 per unit.
As owners, Mast Capital and Rockpoint Group upgraded most of the common areas as well as unit interiors — including granite counters and stainless steel appliances. Miguel would not disclose the cost of the renovations. The remaining units will be upgraded by the buyer, according to Daily Business Review affiliate GlobeSt.com.
In April, Mast and Rockpoint sold their second property in Key West — West Isle Club Apartments — for $56.8 million to Priderock Capital Partners.
The two properties had been the only market-rate multifamily assets in Key West when sold. “You’re talking about a market with limited to no market to develop. Competition would be very limited,” Miguel said.
Developing in Key West can be challenging due to the high price of entry, lack of contractors and a small labor pool, “so the best thing we could have done was execute as much of the renovations” as possible before selling.
Key West lacks developable land and also has restrictive ordinances on new construction even as the population continues to grow. At the time of the sale, Mast Capital owned the majority of professionally managed apartments in Key West with a peak of almost 500 units between the two properties.
“There’s a strong hospitality in Key West. All these people that work in hotels and restaurants and entertainment venues need a place to live. As that marketplace grows, as other hotels and restaurants open, we were able to control the two communities that catered to those renters. We were pretty much the whole market at one point in time,” he said.
From a timing perspective, it was a good time to sell, but Key West “continues to have a bright future.”
The Ocean Walk sale was brokered for the sellers by Hampton Beebe, Avery Klann and Jon Senn with ARA Newmark.
Colin Gillis, vice president of acquisitions for the Southeast at Passco, coordinated the purchase. Chris Black and Caleb Marten of KeyBank Real Estate Capital’s commercial mortgage group arranged acquisition financing for Passco through Fannie Mae.
With more than a decade of real estate and real estate debt experience, Mast Capital targets opportunistic and value-add investments in existing property, ground-up development, distressed real estate and note purchases.
“My approach to investing is to build a portfolio that is diversified. We like to buy quality real estate in assets where if we face a challenge or enter into a downturn, there are assets that we can hold,” Miguel said.
He recently purchased the Conrad Miami Hotel Downtown Brickell for $72 million and just weeks earlier purchased a key site in Miami at 3811 Shipping Ave. near the Shops at Merrick Park in Coral Gables for $11 million. He also just completed the Louver House at 311 Meridian Ave. in Miami Beach, a four-story luxury development with 11 residences on South Beach.
Miguel said the two markets — Key West and Miami Beach — require different strategies.
With the Louver House, the company had to consider design, “and what was unique to the community and quality was at the top of our list of requirements when we were developing it.”
“We looked at Key West as a low-risk, high-return investment property,” he said. Both Ocean Walk and West Isle were inexpensive to finance through Fannie Mae and in a resilient market. That quality of Key West real estate “is difficult to replicate.”