ROM Looks to Acquire $100-$150M of Investments
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LOS ANGELES-Locally based ROM Investments, a private investment firm focused on acquiring value-added multifamily and mixed-use properties in Los Angeles County, has acquired a 49-unit multifamily community located at 4623 La Mirada Ave. in Los Angeles for $6 million. GlobeSt.com exclusively learns that the firm has some definite plans to do more.
In the past 18 months, the firm has acquired more than 200 units in Los Angeles, but it is looking to purchase between $100 million to $150 million in real estate in the next two years, according to Leeor Maciborski, a partner for the firm.
“In this highly competitive investment market, we have resources and ability to pay all cash and to close quickly, giving us an advantage over many buyers,” Maciborski says. “Although prices have risen dramatically in the past three years, multifamily properties in Los Angeles continue to outperform other product types. We will continue to be actively looking to acquire multifamily properties in the Los Angeles area.”
Maciborski tells GlobeSt.com that “We have tremendous investor demand for multifamily product,” when asked why multifamily product. “I can’t tell you how many people come into my office asking me—sometimes even begging—to invest anywhere from $500,000 to $5 million.”
He adds that investors have different preferences, time horizons, and risk tolerances. “Some want real estate for estate planning purposes, others for diversification, but mostly the driver is a search for yield in a low rate environment.” He explains, though, that there is a lack of product. “As long as the Federal Reserve’s policies remain supportive of low interest rates the opportunity cost of holding cash will remain high. For example, one client purchased a property in West Hollywood for a 2% yield, his rationale was that that the return was better than what he was getting on his bank CD. Prices are now a function of macro-economic factors instead of local fundamentals. Spreads between debt and asset yields continue to drive prices higher. If we see compression in those spreads those who are highly levered will get squeezed.”
The type of multifamily product the firm is looking for is value-add infill ranging from $5 million to $20 million, explains Maciborski. “Multifamily has historically outperformed other product types when weighing risk against reward. There’s also the story of declining homeownership and all of the factors that play into that, this leads rents higher as vacancies drop.” In addition, he says, “asset prices tend to lead fundamentals, so we expect rent growth to continue into 2013.”
Another reason the company likes multifamily, according to Maciborski, is because inflation is a concern for some of the company’s partners. “Unlike office and industrial with five-year to 20-year leases, multifamily rents are typically reset every 12 months, allowing for quicker adjustments if the CPI changes.”
For this deal, ROM Investments was represented in-house by Maciborski, partner for the firm. The seller, PS Investments Inc., was represented by Henry Garcia of KW Commercial. Built in 1963, 4623 La Mirada Ave. is located at the crossroads of Silver Lake, Los Feliz, and Hollywood neighborhoods. The community is 100% leased and features 17 studio units, 22 one bedroom/one bathroom units and 10 two bedroom/one bathroom units and two studio units. Currently, rents range from $995 to $1450 per month.
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