Peter Mekras, Senior Vice President, CREC
A one-page flyer would not explain this deal.
When Peter Mekras began marketing three residential buildings in Miami Gardens, he launched a broad campaign that went beyond distributing “For Sale” flyers.
Mekras, who is senior vice president at CREC in Coral Gables, was tapped to sell 347 units in a 412-unit community called The Ellington. The residential complex is home to two apartment buildings and one fractured condominium.
It was Mekras’ job to find a buyer for 260 apartments in two rental buildings and 87 unsold condos in a 150-unit building that went through an unsuccessful condo conversion.
On paper, the deal may have appeared as a messy, convoluted transaction.
“When you’re dealing with a transaction that’s more complex, some people may see the property and think it’s not for them,” Mekras said. “It’s only through a conversation that you open their eyes.”
While Mekras sent out several flyers and email campaigns, he picked up the phone more often.
CREC takes a more boutique approach when representing its clients, he said. Mekras routinely calls dozens of potential buyers when he receives an assignment to create a broader candidate pool. He realizes that without that personalized call, the probability of catching an investor’s attention is significantly less.
When RAIT Financial Trust handed Mekras the listing, the seller asked for a closing by year-end. The Philadelphia-based real estate investment trust purchased the community for $32 million in 2011.
The Ellington was built in 1974 on County Line Road near the border of Miami-Dade and Broward Counties.
Mekras said finding a large-scale investment opportunity in Miami-Dade has become increasingly difficult, especially one with a value-add component. When The Ellington’s units hit the market, hundreds of groups were drawn to the property.
Over 200 signed confidentiality agreements to learn more about the deal.
“That was our goal,” he said. “We went wide and broad and deep to not miss out on the anomaly buyer.”
Mekras said the level of interest generated and the subsequent sale price speak to the depth of demand from investors seeking stable cash flow in South Florida.
Despite the competitive market, the asset was still a tough sell. Today’s apartment buyers are usually looking for product that could be backed by agency financing. These properties, however, were not seen as simple Fannie Mae and Freddie Mac executions.
But Mekras was able to identify alternative lenders that would be willing to finance a deal that involved two apartment buildings and a fractured condo.
“Our process is not just putting the property out there, but also acting as an adviser to our client,” he said. “Price is a very important variable but not the only variable in the transaction.”
Mekras helped RAIT Financial assess risk and fully understand the terms and potential pitfalls of each prospective deal.
Because the transaction involved numerous homeowners’ associations, different parcels and several moving parts, it was quite an accomplishment when the deal was contracted and closed in 31 days.
The 347 units sold for $36.2 million, or about $104,000 per unit.
Mekras declined to identify the buyer but allowed that he or she was chosen after an in-depth interview process. CREC’s marketing process involves questionnaires that ask prospective purchasers details about their underwriting, the source of their debt, their equity and track record of closing transactions.
The final buyer’s responses were “nearly perfect.”
“When you end up with that situation, combined with very strong deal terms, it’s like getting an A on your report card,” he said. “It’s pretty hard not to put them at the top of the list.”
Mekras noted that South Florida’s population and job base continues to outpace the region’s housing supply. Any weakening observed in the rental apartment market is primarily a short-term absorption challenge, he said, and not a long-term supply and demand imbalance.
“While rent growth may slow near-term, South Florida will once again complete this development cycle and be undersupplied,” he added. “This is the pattern of our cyclical, but robust and high-barrier-to-entry market.”
Mekras, who joined CREC in 2009, has a track record of representing over $1.7 billion, 18,000 units and 12 million square feet of closed sale and capital markets transactions. He was instrumental in closing the $108 million financing of the 497-unit Melody Tower in downtown Miami.