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8/22/12
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LA-based Trion Properties recently completed two NoCal multifamily acquisitions, in Fresno and Sacramento, while selling another asset, located in Auburn. The company acquired 124 units in Fresno and in a separate transaction acquired a portfolio of four nonperforming notes on 224 units in Sacramento, for a total of 348 units in the Central Valley.
These transactions continue the high volume of activity the company has generated over the past year, with seven acquisitions and renovations, along with the four recent dispositions.
The Fresno asset, La Costa Apartments, at 1535 N. Cedar Avenue, was acquired out of a special servicer’s REO portfolio for $3.26 mil. At close, the 124-unit property was approximately 50% vacant and required an extensive renovation of the common areas and the unit interiors. Upon completion of the renovations, estimated to cost $650k, Trion will commence an aggressive leasing program to increase the occupancy to 90%+ and ultimately stabilize the asset. Trion will then list the property for sale with the procuring broker, Kitty Wallace of Colliers International.
The company’s acquisition in Sacramento consisted of four notes backed by 224 units with an unpaid principal balance of approximately $7 mil, or $32k per unit. It was acquired directly from a national lender. The four properties are located in the Arden-Arcade submarket of Sacramento.
Commenting on the transaction, Trion Properties’ Max Sharkansky said, “The opportunity lies in a workout with the borrower where the loans will be paid off through a refinance, unless other methods of workout are available with the borrower.”
Trion Properties also concluded a seven-month investment with the sale of a 16-unit townhome property at 2280 South Dr in Auburn, which is also in the Sacramento submarket. The company acquired the asset in December 2011 for $1.35 mil through the purchase of the nonperforming bifurcated construction loan and subsequent Deed in Lieu. Tony Azzi and Rabbie Banafsheha from Marcus & Millichap represented both the buyer and the seller in the transaction.
The property was 80% occupied when title was acquired and required minimal renovations. The units were originally built as condominiums and consist entirely of three-bed/three-bath townhomes with an average size of 1.35k sf. The property also has a recorded tract map and DRE white slips, creating value for an investor with a condominium exit strategy. The property was sold for $2.4 mil after a total hold period of seven months, creating a return to the investors of $662k and yielding a triple-digit internal rate of return (IRR).
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