It seems that Willow Glen, a 98-unit apartment community in San Diego, was a good investment for Trion Properties, a private equity real estate firm that specializes in value-add multifamily investments, in June 2015.
Within 18 months, Los Angeles–based Trion doubled the property value, according to Max Sharkansky, managing partner. Trion invested approximately $2.6 million in renovations in the development, including the installation of quartz countertops, stainless steel appliances, and new cabinetry in each of the units. Exterior upgrades included a complete revamping of the façade with new paint, as well as the integration of drought-tolerant landscaping to minimize operating costs and improve the sustainability of the property.
“When we acquired this property in 2015, the asset was valued at $9.6 million,” said Sharkansky, in a release. “Today, it is appraised at approximately $19.4 million.
“Our ability to dramatically increase the value of this property in a year and a half speaks to both the strength of our investment strategy, as well as our vertically integrated property management platform. We successfully stabilized the property and increased the occupancy to 95%, resulting in substantial risk-adjusted returns to our investors.”
Willow Glen is in the College Area submarket of San Diego and, according to Sharkansky, was acquired in one of the lowest price-per-unit multifamily sales in San Diego that year, allowing Trion to invest more equity in its redevelopment.
“San Diego remains one of the most-desirable markets for multifamily investments,” Sharkansky said in the release. “The limited supply of multifamily product, coupled with the growing demand for quality housing near major schools and employers, is placing upward pressure on rents throughout the region. Our niche strategy of targeting and repositioning highly distressed assets in strong, central locations enabled us to recognize this opportunity and implement a comprehensive renovation plan that would maximize the property’s potential in record time.”
Willow Glen’s close proximity to San Diego State University is a big selling point for young adults, notes Sharkansky. “Our strategy was to leverage this demand and bring the asset up to market by converting it into a modern, high-quality community that would appeal to millennial renters in this submarket,” he said.
Continental Partners, a Los Angeles–based mortgage banking firm, secured a $12.85 million loan from Banc of California on behalf of Trion Properties to refinance the asset. The five-year loan was structured with a loan-to-value ratio of 67%, with an amortization of 30 years. The additional equity provides funding for future multifamily investments, Sharkansky says.
