"Acacia Capital has been the equity backbone on many raw apartment rehab deals over the past five years, but they've only recently decided to jump into the fray as a direct purchaser," David Casper of Phoenix-based Hendricks & Partners' West Los Angeles office tells GlobeSt.com of the Southland market acquisition. Casper and Bruce Furniss of the Hendricks & Partners' Anaheim office represented buyer and seller.

The Villas at Tustin at 2414 N. Tustin Ave. was nearly 95% occupied at the time of the sale. The complex consists of 24 two-story and 14 three-story wood frame and stucco buildings. It includes 40 studio apartments of 472 sf each; 192 one-bedroom, one-bath units of 700 sf each; 58 two-bedroom, two-bath units of 966 sf each; and 116 two-bedroom, two-bath townhouses of 1,011 sf each. The studios rent for $895 per month; the one-bedroom, one-bath units go for $985 to $995; the two-bedroom, two-bath apartments rent for $1,225; and the townhouses rent for $1,225 to to $1,295.

Built in 1972, the complex had been owned by the seller for about 27 months. Casper says the sellers had rehabilitated 80% of the interiors and the majority of the common areas. "I believe that they (Acacia) saw something that, frankly, the others (potential buyers) missed, namely, the opportunity to perform relatively mild additional rehab to the unit interiors and generate rent increases north of $100 per unit per month."

Casper adds that the seller had already achieved such rent increases on some of the units. He believes the new owner can do the same on a large percentage of the units over the next year to 18 months.