Gray Property Group has closed on the acquisition of Phillippi Square Apartments, a 28-unit multifamily property located in Sarasota, Florida.
The property was acquired for a net purchase price of $4.85 million, or approximately $173,000 per unit, representing roughly a 13% discount to the seller’s 2022 purchase price. Phillippi Square is located west of the Tamiami Trail, approximately ten minutes from Downtown Sarasota and Siesta Key. At closing, the property was stabilized and 96% occupied.
The asset was in strong physical condition at acquisition, with renovated interiors, a new roof, and a recently repaved parking lot completed within the past five years. No significant deferred maintenance was identified, aside from cosmetic improvements needed for the grounds and pool area.
At closing, in-place rents were approximately $75 per unit below market. Gray Property Group plans to implement a light value-add program focused on installing in-unit washer and dryers and enhancing the grounds and pool area. These improvements are expected to support rent growth to approximately $1,850 per unit over the next two years or sooner.
The investment is projected to generate cash returns of approximately 5% in Year 1, increasing to roughly 8% by Year 5. A refinance in Year 5 is projected to produce an estimated 2.01x equity multiple, net of all fees and sponsor compensation. The senior loan includes no prepayment penalty, providing flexibility to refinance if interest rates decline. Each 1% reduction in interest rates is expected to increase annual cash returns by approximately 1.8%.
Managing Principal Nick Gray invested approximately 25% of the total equity alongside the firm’s investor base. Phillippi Square Apartments aligns with Gray Property Group’s long-term strategy of acquiring well-located, stabilized multifamily assets with clear paths to durable value creation.
