Dealmaker: Passco Cos. Acquires Key West Apartments for $102M

Passco Cos., Irvine, Calif., acquired Key West, Fla. multifamily community Ocean Walk Apartments for $101.5 million from Mast Capital and Rockpoint Group.

The purchase represents the largest single-asset transaction in the firm’s history.

The asset–one of only three professionally managed multifamily communities in Key West–represents nearly half of the entire island’s multifamily supply, said Passco Vice President of Acquisitions Colin Gillis.

“Key West is without a doubt one of the highest barriers to entry markets in the entire country with relatively no remaining development sites, extremely limited competition and a highly mandated growth ordinance,” Gillis said.

Gillis said prior owners upgraded most unit interiors with granite countertops, stainless steel appliances, new cabinetry and flooring. Gillis said Passco plans to renovate and update the remaining 10 percent of the 297 units not updated during prior ownership.

Passco acquired eight properties in Florida over the past two years. It has acquired four properties nationwide in 2017.

Hampton Beebe, Executive Managing Director with ARA Newmark, brokered the deal. He noted Key West market has experienced strong population gains, record rent growth and is under supplied, which positions Ocean Walk Apartments well.

KeyBank Real Estate Capital Commercial Mortgage Group Senior Vice President Chris Black and Vice President Caleb Marten arranged Fannie Mae acquisition financing for Passco Co.

Passco Co. recently sold its interest in The Village at Lionsgate, a 360-unit apartment community in Overland Park, Kan., to its venture partner for $48 million.

“The Kansas City metro is one of the most sought-after emerging markets in the Midwest,” said Passco Chief Operating Officer Alan Clifton.

Clifton said Passco brought the average occupancy at the property up to 95 percent and achieved steady net effective rent growth during its 10-year hold period.

ARA Newmark Vice Chairman Mac Crowther represented parties in the transaction.