(Read more on the multifamily market.)

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NEWPORT BEACH, CA-CT Realty Corp. and Carlsbad-based MacbethApartment Systems Inc. have formed a joint venture to acquiremultifamily properties in Southern California, marking the returnof CT to the multifamily arena. According to CT Realty PresidentRobert M. Campbell, the Newport Beach-based firm will use fundsfrom its California Fund V and its new California Fund VI toacquire multifamily properties in San Diego, Orange, Riverside, SanBernardino and Los Angeles counties.

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CT Realty once owned about 6,000 apartment units, which thecompany then renovated and sold over the past few years. Thecompany instead has been focusing on redevelopment of office,industrial and self-storage properties as well as other real estateinvestments in the recent past.

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The new agreement is structured as an equal partnership betweenCT Realty and Macbeth, which has worked with CT Realty as athird-party consultant for several years providing constructionmanagement, market repositioning and management services for CT'smultifamily properties. CT will provide equity financing as well asstrategic planning for the acquisition of the properties, withMacbeth handling construction oversight, marketing and day-to-daymanagement.

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The two companies already have their eyes on a number ofmultifamily properties where they see "excellent upside potential,"according to Campbell. Charles Macbeth, president of MacbethApartment Systems, says that the new agreement with CT reflects theCarlsbad-based company's desire to move into apartment ownership inaddition to building its management portfolio.

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Macbeth was established in 1987 in San Diego and has managedmore than 30,000 apartment units over the years. The firm nowmanages approximately 9,000 apartment units for other companies, aswell as 1,100 units for its own portfolio.

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Campbell says that one potential source of acquisitions for thenew joint venture is apartments that were converted to condominiumsbut did not completely sell. Complexes with partially soldcondominiums "trigger numerous financial problems for the lenders,homeowners associations and ultimately the residents," he observes.With its new agreement with Macbeth, CT will have the capability toact as a "white knight" in such situations because it can finance,restructure, redevelop and then manage these properties, Campbellexplains.

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Other likely sources of apartment deals for the new venture willbe real estate owned by banks. The new venture also expects to workwith apartment brokers, land brokers and consultants to the realestate development industry such as engineers, architects,accounting firms and general contractors, as well as otherdevelopers interested in partnering on multifamily acquisitions,Campbell says.

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