LOS ANGELES-JB Matteson Institutional Capital Partners of Redwood City has acquired four Mid-Wilshire apartment buildings totaling 199 units for $22 million and plans to invest $4 million in a value-added play. The company bought the properties from a Los Angeles-based private investor in an off-market, principal-to-principal deal.

JB Matteson, which is a new affiliate of the Matteson Cos. that was launched this year, acquired the portfolio in partnership with a major financial institution. The portfolio was approximately 92% occupied at the time of the sale.

The four properties are the 59-unit Arwyn Manor at 3838 8th St., the 43-unit St. Andrews Apartments at 715 S. St. Andrews, the 49-unit Elmwood Apartments at 326 S. Normandie Ave. and the 48-unit Avalon at 324 S. Catalina. John Bellack, managing partner at JB Matteson, describes the acquisition as "an attractive strategic investment due to the strong market condition, excellent infill location, deep discount to replacement costs, and scarcity of new supply."

The new Matteson assets are in a part of Los Angeles where many investors have acquired and improved apartments in recent years, often restoring older buildings that feature unique architectural details and finishes that would be difficult or extremely expensive to duplicate today. The new Matteson apartments, for example, were built in the 1920's and feature brick facades with what the new owners call "unique character," such as hardwood floors and other period details.

Bellack tells GlobeSt.com that Matteson sees opportunities in its newly acquired Los Angeles apartment buildings both in terms of the multifamily market in general and in terms of the specific properties. "The fundamentals for the multifamily sector are very compelling right now," Bellack says, citing the steadily rising rents and housing market conditions like rising for-sale prices and short-term interest rates that bode well for the rental market.

In addition, Bellack says, now is an opportune time for value-added plays like Matteson's acquisition of the L.A. properties, where it plans upgrades to individual units as well as common areas. "If you believe that increasing interest rates are putting upward pressure on cap rates, you have far more risk in a core strategy than you do in a value strategy because in a value strategy you're increasing your operating income," Bellack points out.

The four apartment complexes that Matteson acquired are "historic pre-war buildings with a lot of character and high-quality materials," Bellack notes. The company's renovation plans will keep the building facades, character and overall design intact while improving the units and common areas, he says.

The Matteson Cos. are a group of privately held, affiliated entities that develop, manage and invest in properties throughout the western US. The companies currently manage a $1-billion portfolio of multifamily, office, retail and mixed-use properties.