NEWPORT BEACH, CA-CT Realty Corp. and Carlsbad-based Macbeth Apartment Systems Inc. have formed a joint venture to acquire multifamily properties in Southern California, marking the return of CT to the multifamily arena. According to CT Realty President Robert M. Campbell, the Newport Beach-based firm will use funds from its California Fund V and its new California Fund VI to acquire multifamily properties in San Diego, Orange, Riverside, San Bernardino and Los Angeles counties.

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

The new agreement is structured as an equal partnership between CT Realty and Macbeth, which has worked with CT Realty as a third-party consultant for several years providing construction management, market repositioning and management services for CT's multifamily properties. CT will provide equity financing as well as strategic planning for the acquisition of the properties, with Macbeth handling construction oversight, marketing and day-to-day management.

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

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

Campbell says that one potential source of acquisitions for the new joint venture is apartments that were converted to condominiums but did not completely sell. Complexes with partially sold condominiums "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 to act as a "white knight" in such situations because it can finance, restructure, redevelop and then manage these properties, Campbell explains.

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