Los Angeles growth is spilling into other markets, and it is creating new opportunities for investors. Fresno is the newest market to hit investor radars. JRK Property Holdings has entered the Fresno market with the purchase of a 614-unit multifamily property, which the firm purchased for $98.8 million from Demmon Partners. We sat down with James Bloomingdale, SVP and head of acquisitions at the firm to talk about the acquisition and their interest in the market.

GlobeSt.com: Why were you attracted to the Fresno/Central valley market for investment?
James Bloomingdale: While Fresno is still the agricultural hub of the Central Valley, its economy has recently transformed to a much more dynamic market, especially within the medical and education sectors, bringing many highly educated individuals and high paying jobs to the area. We think this transformation is still in the early innings as Fresno presents a much more affordable housing alternative to the skyrocketing rents of other large California regions like Los Angeles, the Bay Area, and even Sacramento.

GlobeSt.com: What is your strategy for this market?
Bloomingdale: Crown Point, Cascades and Dominion Heights are all well maintained but the in-place rents lag comparable properties in the submarket due to inferior common area amenities and dated unit interiors. We plan to physically transform the properties so that they can compete directly with the high end of the market. The renovation will likely include brand new clubhouses, resort style pools, state of the art fitness centers, and upgraded unit interiors. We also plan to paint the properties and enhance landscaping to differentiate the properties from the competition.

GlobeSt.com: How do opportunities in this market compare to the greater Los Angeles area?
Bloomingdale: An asset in Los Angeles with comparable physical product and location to our Fresno deals would trade at a significantly lower cap rate and therefore have lower cash flow, but would likely have more long term appreciation. In Fresno, we like the strong in-place cash flow while the deal still presents favorable appreciation potential due to its California location.

GlobeSt.com: Have you seen other investors also head into this market, and what was competition like for this purchase?
Bloomingdale: Yes, there was a high level of interest from other institutional investors and significant competition for the portfolio. The deal stood out since it's very challenging in today's market to find higher yielding multifamily deals in great submarkets in a state with such strong demographics like California.

GlobeSt.com: Do you expect to make more investments in this market?
Bloomingdale: California in general is one of JRK's target markets, so we expect to be active throughout the state wherever we find compelling opportunities.

Instant Insights /

Investors Head North for Multifamily Opportunities

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