Hey, now! Looks like Encino, Calif.–based New Standard Equities—the 2010 start-up by former Kennedy Wilson Multifamily COO (not to mention former Larry Sanders Show writer) Edward Ring— closed out 2011 with the largest multifamily sale in the Long Beach, Calif., market. Announced Dec. 5, New Standard Equities' $34.5 million acquisition brings the firm and its acquisition partner, New York City–based Phoenix Realty Group, the 237- unit Crossings at the Bay, where New Standard will operate the complex while overseeing a value-add repositioning of the 1963 vintage product catering to market-rate renters and students.
Helping New Standard and Phoenix close the deal was straightforward agency financing, leaving the team with leftover equity to plow into rehab. “It's an 80 percent loan from Freddie Mac with a 4.05 percent coupon, and all of our renovation dollars flow through equity,” says Ring, who adds that he had this specific deal on his radar for some time. “I've chased other things in the Long Beach area, and I knew the property and always felt it was strangely underperforming for the location and the size of the project,” Ring says.
New Standard will likely look for significant rent uplifts to make its rehab dollars pop. “New Standard Equities looks for properties that are undermanaged, are underperforming vis-Ã -vis the comps, and could use additional capital to resurrect and bring them back to life,” Ring says. “I do also want to find things where I can go in and truly renovate and tear things down to the bones.”
At Crossings at the Bay, New Standard will be “reimagining the entire asset from a faÃ§ade perspective,” says Ring, as well as go into the interiors and renovate to the market demographic without pricing it off of the community.
“There are a lot of student renters here, and we try to improve to the market rather than overimprove, so we consequently have an asset-by-asset renovation strategy rather than having a blanket policy of going in and tearing everything up.”
Ring is eager to pursue additional deals across Southern California, the San Francisco Bay area, and the Seattle/Puget Sound market, and would be more than happy to build out the portfolio to a size that begins to rival Kennedy Wilson's 13,531 units.
Noting that Crossings at the Bay's comps include properties owned by Englewood, Colo.– based Archstone; Palo Alto, Calif.– based Essex Property Trust; and Chicago-based Equity Residential, Ring says he's content with the upshot for New Standard in Long Beach as the firm scours the region for new deals.