Excerpted from Tampa Bay Times story.
TAMPA — As the demand for apartments continues to grow, two more Tampa Bay condo communities are on track to become exclusively rentals.
Last week, a New York-based company paid $7.3 million for 109 of the 240 condos in Enclave at Sabal Pointe in St. Petersburg’s Pinellas Point area.
And on June 7, Tampa-based Robbins Property Associates and a partner obtained financing to buy 312 of the 390 condos in Arbors at Carrollwood in north Tampa.
The transactions are the latest in a trend that caused an uproar a few years ago and led to changes in state law to better protect individual condo owners from so-called “bulk buyers.”
Termination of a condo association used to require approval of 100 percent of unit owners. But as foreclosures and two active hurricane seasons left many units damaged and vacant, the Florida Legislature in 2007 amended the law so that 80 percent of owners could terminate an association if no more than 10 percent of owners were opposed.
Investors, realizing that the new law could help them convert condos to apartments, began buying up units by the score and renting them out. Demand for rentals was great because many people had lost their homes to storms or, starting in 2009, foreclosure. But the bulk purchases led to “fractured” communities — half rental and half condo — and complaints from individual owners that their units were plunging in value.
Owners in several Tampa Bay communities including the Slade at Channelside alleged that they were being bullied into selling to investors. The outcry prompted lawmakers to enact changes in 2017 that enabled just 5 percent of owners to block conversion and required owners to be paid 100 percent of fair market value for their units.
“A lot of communities are stabilized now, but there are still communities out there that are very fractured and challenged by the disparity in value between what the units sold for and what they are worth today,” said Darron Kattan of the brokerage Franklin Street, which arranged the sale of Enclave at Sabal Pointe.
Kattan said that about 10 percent of the unit owners have homestead exemptions, indicating that is their primary residence. Since the deal closed, the buyer, Axonic Properties, has purchased another 22 units, although it is not clear how many of those were homesteaded.
Both Enclave and Arbors at Carrollwood began as rentals that converted to condos and now are being reconverted to apartments.
At Arbors, built in 1999 on more than 56 acres, Robbins and partner LEM Capital want “to assemble as many units as possible,” said Mitch Sinberg of Berkadia, the mortgage company that arranged the loan.” The more they have, the more they can create value at the property. But if they don’t assemble all of them, it by no means derails the business plan.” The loan amount was not disclosed.
Property appraiser records show that only six of the Arbor’s individually owned units have homesteads. Should any owners decide to sell, they could do so to either Robbins or a third party.
While condos in fractured communities often lose their value, Sinberg said Robbins is planning improvements that will make the Arbors more desirable.
“If you look at the property now, it looks tired,” he said. “Robbins is planing an overhaul to make sure that both exteriors and interiors look like fresh, clean new assets and I think that will benefit the unit owners.”