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Saturday, Jun 15, 2024

Key West Lands 2nd Big OC Investor in a Month

It’s a nearly 2,900-mile trip from Orange County to Key West, Fla., site of the southernmost point in the continental United States.

Despite the distance, be prepared to run into a few OC real estate executives during your stay on the island.

Irvine-based Passco Cos. LLC is the second notable area real estate firm to make a big investment there in the past month.

It paid $101.5 million in late August to buy Ocean Walk Apartments, a 297-unit complex that’s described as one of three professionally managed apartment properties on the island.

It was built in 1989 on about 17 acres on the Atlantic side of Key West near the island’s main tourist and commercial areas. Rents are about $1,775 for one-bedroom units and can near $2,900 for three-bedroom units, according to local news reports.

Amenities include a clubhouse, a swimming pool with sundeck, tennis courts and a basketball court.

The purchase comes to about $341,000 per unit. The complex was sold by a venture of Mast Capital and Rockpoint Group, which bought it three years ago for about $75 million, according to the local news reports.

Passco assumed a $70 million Fannie Mae loan as part of the deal, one of several Florida apartment buys it’s made in the past four months.

The firm has reportedly made nearly $400 million worth of property buys since May, including apartment complexes in Tampa, West Melbourne, and Estero, Fla.

It now owns more than 2,300 rental units in Florida, the most it has in any state, according to its website.

Passco reports more than $2 billion in assets under management; in May the Business Journal ranked it 28th among OC’s largest private companies, with $682 million in revenue last year.

The company was founded by Chief Executive Bill Passo, now 75 and one of the first real estate investors to use the tenant-in-common investment structure that’s become commonplace in the industry.

The Key West buy comes a month after Aliso Viejo-based Sunstone Hotel Investors Inc. announced it paid $175 million for a new resort in Key West about two miles away from the apartment complex.

The hotel investor said it acquired the 175-room Oceans Edge Hotel & Marina, which opened in January and is billed as “the largest purpose-built luxury resort and marina in Key West.”

That works out to $1 million per room for the resort, whose attached marina is the closest in the U.S. to Cuba, according to news reports.

Neither Passco nor Sunstone need to worry much about new development competing with their properties.

“Key West is an incredibly difficult market to add supply to, given the rate of growth ordinances that are in effect for the safety of the island for a number of reasons, environmental protection and so forth,” Sunstone Chief Investment Officer Robert Springer told analysts during an August earnings call.

Increased Coverage

Irvine-based investor 4G Ventures has added another Laguna Beach property to its portfolio.

An affiliate of the firm recently paid about $10 million for 305 N. Coast Highway, a nearly 10,000-square-foot multitenant retail property at the intersection with Aster Street next to the Royal Hawaiian restaurant.

The property was sold by a local family trust, according to property records.

4G Ventures is a real estate venture headed by Mo Honarkar, a local wireless executive and Laguna Beach resident. He owns other area property, including the next-door Royal Hawaiian.

It’s the second notable deal 4G Ventures is reported to have made this summer in Laguna Beach. In July, it bought a five-property retail and residential portfolio for $32.9 million, a deal that included the Seven-Degrees event venue at 891 Laguna Canyon Road, a well-known wedding spot.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

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