Ashcroft Capital continues to be bullish on the Sunshine State. The firm recently acquired a 354-unit multifamily community in Winter Garden, marking its sixth in the Orlando metro and its 11th in Florida.
Formerly Braxton Waterleigh, the firm has rebranded the community to Halston Waterleigh as part of its Halston brand that consists of core and core-plus assets with high-quality finishes.
The luxury garden-style community is located in the 22,000-acre Horizon West master planned community and less than 4 miles from Walt Disney World.
Built in 2021, it comprises one-, two-, and there-bedroom homes ranging from 769 to 1,484 square feet with stainless steel appliances, wood-style flooring, granite countertops, and pendant lighting. Residents have access to a heated saltwater pool with cabanas; an expansive fitness center; a resident clubhouse; an outdoor kitchen and grilling area; an on-site pet wash and pet park; a sand volleyball court; EV charging stations; and digital package lockers. Birchstone Residential, Ashcroft’s in-house property management company, is providing services for residents.
While the purchase price was not disclosed, Ashcroft founder and CEO Frank Roessler says the window to acquire attractive assets like Halston Waterleigh at a significant discount to replacement cost is closing.
“Over the past two years that the Fed has been fighting inflation by increasing interest rates, cap rates have correspondingly expanded. There has been a price correction in the markets, and one of the most significant is the delta between Class A, B, and C product. Until recent years, cap rates for all three were trending dangerously close to one another. Pricing has now corrected and so, too, have risk-adjusted cap rates,” Roessler says. “There is a strong belief in the markets that we are at the bottom. And as interest rates normalize over the next 12 to 18 months, Class A assets like Halston Waterleigh stand to gain the most in valuation recapture.”
He adds, “This isn’t to say that values will ever go back to where they were when interest rates were near zero, and we don’t expect them to, either. What we’re seeing is a normalization of values.”
Ashcroft, which has a portfolio of more than 14,000 residences in Florida, Georgia, North Carolina, and Texas, seeks metros with a combination of slowing new supply and strong population and job growth.
For example, Roessler says the firm will continue to selectively acquire new communities in the Orlando metro, pointing to the slowing of new construction in the market along with strong demographic trends and continued population and job growth.
In addition, the firm is interested in expanding to new markets in the state.
“Originally, we were only targeting Orlando, Tampa, and Jacksonville,” he says. “Our assets in those metros have performed quite well. Due to this, within the past 14 months, we have expanded into Sarasota and Fort Lauderdale.”
Roessler notes there are challenges that come with owning multifamily communities in the state.
“Current owners have faced unprecedented increases in insurance rates,” he notes. “We were not immune to this, as we saw an increase in 2023 of roughly 50% on our premiums. However, in 2024, we saw a more moderate single-digit increase in rates.”
Looking ahead, Roessler says the firm will remain disciplined with its approach to multifamily acquisitions, focusing on highly desirable locations with strong fundamentals. Each opportunity will be carefully evaluated to make sure the value-add proposition is in line with the firm’s investment goals, he adds.
He also is closely watching the metros with a substantial amount of new supply and where there were collections issues as rising rental rates butted against affordability in certain submarkets.
“These factors created softening in many instances. However, that is not to say this softening created waves of distress,” he adds. “Moving forward, we do not expect rental growth to get back to the unprecedented levels that we saw shortly after COVID. We expect a return to normalization within the Sun Belt and the metros that we own in. We remain bullish on the outlook of multifamily, and the trends seem to support this.”