Another apartment owner has transferred a sizeable portfolio of assets to special servicing. Last week, the New York-based apartment owner (cited as ADEM Properties by Fitch Ratings) saw 12 of its L.A. area properties transferred to special servicer, Miami Beach, Fla.-based LNR Partners, for imminent default, according to reports.

The portfolio, known as Apollo Portfolio I, included 12 properties, totaling 557 units, scattered around the L.A. area, according to a report from Bloomberg. The balance remaining on the loan, which listed Wells Fargo as the master servicer, is $43.5 million. The owner bought the loan with the expectation of doing rehabs as the units turned, however, vacancy rates went up higher than expected during the recession, according to Bloomberg. Those vacancies led to a faster-than-expected rehab schedule.

Jeff Patterson, partner in the California office of brokerage firm ARA Advisors, says the number of units going into servicing is rare for the Los Angeles market. He says the average deal size going into servicing in the area is under 30 units.

“On the CMBS side, there’s been nowhere near the volume in Southern California that there have been in other places, like Houston and Dallas,” Patterson says. “There was a lot more commercial bank financing than CMBS being done here. And, during that period, there weren’t as many transactions in Southern California as there were in other parts of the country.”

Still, in many ways, the portfolio mirrored the characteristics of other problem CMBS loans. The loans were underwritten in March 2007, and all 12 properties were built before The Great Depression—the 45-unit Valencia Apartments was built in 1913 and is the oldest. Most (though not all) were renovated in the late 1980s. None of the properties are huge—the largest contains just 70 units.

Patterson says the properties that do fall into trouble in Los Angeles are generally performing well. “The older stuff in the city is not bad product; it’s just old,” he says. “There’s a lot of housing and high demand. A lot of the older stuff is over-leveraged, but it’s not a performance issue.”