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Cash + speed = opportunityin this real estate market

Laramar's Ron Roan talked about a St. Petersburg deal and the company's plans.

By PAUL SWIDER, Times Staff Writer
Published September 9, 2007

Laramar's Ron Roan talked about the deal and the company's plans.

How did you acquire Snell Isle Apartments?

It was an extremely complicated transaction. Basically, we bought the note (from lender Wachovia Investment Holdings LLC) for about $30-million and then foreclosed (on Pinellas County developers Steve Spencer and John Loder). We did get it at a discount (the original debt was nearly $40-million).

What are your plans for the complex?

We intend to run it as a high-end rental complex. We will spend about $40,000 per unit in renovation, not the typical granite and stainless package, but new cabinets and countertops and appliances. We'll also enhance the pool, add a putting green, a water walkway, volleyball court, try to emphasize the lifestyle of enjoying the outdoors. We have no plans to do anything with the docks (on Smacks Bayou). There is some asbestos in the buildings, but we'll encapsulate that with drywall in keeping with the approved plan.

When will the complex be open for renters?

The entire rehab will take a year or more, but we will turn buildings as they are done. We'll start next month and will have the first apartment available around Thanksgiving. We move extremely quickly.

What will the rents be?

We are still in the process of determining that. Before it was somewhat underutilized. It was in the average $700 to $800 range, and that is low. Ours will be substantially higher.

How did you work out such a discount?

We work with banks to help people who are upside-down (owe more than the asset is worth). With the fallout in the market the last few years, that happened to a lot of people, a lot of smart people. They get sort of trapped; there's not enough cash flow or the building is already empty. And the banks don't want to own these. It does create an opportunity for us because we have the cash and we're able to move quickly.

Where do you get that kind of cash for such a transaction?

In December 2006, we closed the Laramar Multi-Family Value Fund, a $350-million investment fund, giving the company the ability to acquire $1.4-billion in value-add, multifamily real estate assets.

Did you start that fund expecting these kinds of market opportunities?

We do value-add investing, but we didn't know the market would drop like this. It just timed out well from that standpoint.

Why did you choose this property?

It's a remarkable location, 1,100 feet of waterfront in a very desirable neighborhood. The barriers to entry in this area are high, but this was an underutilized property. It's so rare to find a location like that. That's what attracted us to this deal. We try to pick locations that are compelling.

Will you convert this to condos?

We intend to hold this long term as a rental. The market has definitely swung back to rentals.

Are you looking for more properties?

We're always shopping. We have bought three other properties in Florida since the fund closed (Bay Park, 228 units in Clearwater; Park Baldwin Palms, 426 units in Orlando; and Hillsboro Bay Club, 366 units in Coconut Creek) and eight properties overall in the country, representing about 30 percent of the fund.

Are there more of these deals out there?

We've been seeing quite a bit of it throughout the state. We expect to see quite a bit. We have lots of cash and can move very quickly. Sometimes time is a big issue.

[Last modified September 8, 2007, 22:51:33]