$29M Buy Launches Repositioning Plan

NORTHRIDGE, CA-StarPoint Properties of Los Angeles plans to spend $10,000 per door to upgrade the 152-unit Village at Granada Hills apartment complex after acquiring it for $28.6 million. Paul Daneshrad, CEO/president of StarPoint Properties, says the company plans to raise the value of the complex through the $1.5-million renovation program, which will include "adding luxury touches to the units," he says.

Average rents at the Village at Granada Hills are $1,349, which StarPoint plans to raise to an average of $1,738 as part of its repositioning. Built in 1973, the property at 10435 Lindley Ave. consists of 10 apartment buildings and a combination leasing office and clubhouse. The buildings, all two-story garden-style structures, occupy a site of 4.55 acres.

StarPoint expects to begin common area renovations in October, which will continue for one year. Plans call for a new community recreation room, a billiard room, a manager's office and an enclosed garage. After renovations are complete, StarPoint expects an IRR of more than 25%.

The individual units will get upgrades including new cabinets, flooring, granite counters, plumbing and lighting. The complex, which was 93% occupied at the time of the sale, consists of two- and three-bedroom units that average 983 sf. The property will be renovated over time as tenants vacate the units, Daneshrad says.

StarPoint bought the property from a California-based private investment firm that specializes in multifamily value add deals, targeting major metropolitan areas of the Pacific Coast. The transaction was brokered by Chris Thompson of Investment Real Estate Associates.

Financing for the acquisition included a loan that was originated by the Calabasas office of ARCS Commercial Mortgage Co. The loan was for a 10-year term, with a 30-year amortization after two years interest only at a rate of 5.935%.