MURRIETA, CA-Griffin Investments of West Los Angeles has acquired two apartment complexes totaling 386 units here and in Indio for $38 million in deals financed by George Smith Partners of Century City. The properties are the 200-unit Rancho Las Brisas apartments at 40125 Los Alamos Rd. in Murrieta and the 186-unit Andorra apartments at 81720 Avenue 46 and Highway 111 in Indio.
Principal Steve Bram of George Smith describes the financings as five-year fixed rate securitized loans from two different lenders priced at the five-year T-bill plus 112 basis points, or approximately 6%. The interest-only loans closed at 78% of cost and are open to prepayment for the last 12 months.
Bram says that although the cash flow did not initially support the loan amounts, reliance on the borrower's business plan allowed the lenders to provide "very competitive financing." "With today's low cap rates, especially for apartments, obtaining full loans can be difficult," Bram explains.
Bram notes that the new owner plans to implement a comprehensive repositioning strategy, which includes renovations, adding washers and dryers to many of the units, gating the communities and raising rents to market value.Griffin acquired the Murrieta property from California Rancho LP, a partnership based in Massachusetts; it bought the Indio property from a partnership of Beverly Hills-based Kennedy Wilson's Multifamily Management Group subsidiary and Pacific Coast Capital Partners.
Griffin Investments is owned by Dr. Sol Rabin, one of the founding members of Trust Company of the West pension fund adviser. Griffin owns approximately 2,000 units in Southern California.
Kennedy Wilson says that the sales price was $18.75 million for the Andorra, which the sellers bought three years ago for $13.5 million. The partnership then invested $1.6 million in upgrading the 8.98-acre complex.
The sale of the Andorra Apartments "exceeded the pro forma we established when we purchased the property in 2003," notes Bob Hart, president and CEO of KW Multifamily. Hart points out that Indio and the rest of the Coachella Valley constitute a growing market and that the Andorra complex "sits in the center of much of the development activity taking place in the area and, thus, was an attractive investment opportunity.
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