The deal consisted of a three-property portfolio in Jacksonville with 882 units, and a 252-unit complex in Orlando, according to a statement by Elco Landmark Residential, the Tampa-based buyer. Marty McKenna, a spokesman for Equity Residential, confirmed the sale and the price.
“This is part of their strategy for redeploying equity and doing additional acquisitions,” Joseph Lubeck, chief executive officer of Elco, said in an interview. “We’re happy that it worked out well for them and it worked out well for us.”
Elco Landmark, combined with Landmark Apartment Trust of America, a non-traded real estate investment trust of which Lubeck is the executive chairman, owns 25,000 apartments in eight states, he said.
Equity Residential, the Chicago-based REIT founded by billionaire Sam Zell, is selling assets in markets it sees as outside its core growth areas. The company is accelerating dispositions to help fund its purchase of 60 percent of Archstone from Lehman Brothers Holdings Inc., a deal that will bolster holdings in cities where it already has properties, sometimes across the street.
Equity Residential is teaming with AvalonBay Communities Inc. (AVB) in the cash-and-stock deal for Archstone, valued at about $6.5 billion, and plans to sell as much as $4 billion in properties. Chief Executive Officer David Neithercut said in a Nov. 26 conference call that the company will sell “a large portion of our remaining assets” in Phoenix; Atlanta; Orlando and Jacksonville, Florida; and California’s Inland Empire.
Equity Residential is focusing its portfolio on coastal cities where land is scarce and zoning restrictions limit development. Since 2005, the company sold more than 129,000 apartment units for about $10.7 billion combined. according to its latest quarterly report.
The communities it sold to Elco include Jacksonville’s Waterford at Deerwood, built in 1985; Royal Oaks, constructed in 1991 and Bermuda Cove, built in 1989. The three properties are 94 percent occupied, according to Elco.
Elco also acquired the 24-year-old Lexington Park complex in Orlando, which is within 5 miles (8 kilometers) of the Universal Studios amusement park and is 92 percent occupied.
The buyer plans to spend as much as $5,000 per unit to renovate the assets and to eventually increase average monthly rents, currently about $1,000, by about $100, Lubeck said.
“We’re certainly going to be standing in line and hopefully we get the opportunity to do more business with EQR,” he said.
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