$55M Refinances Apartment Portfolio

LAKE FOREST, CA-Advanced Real Estate Services Inc. has secured $55 million through NorthMarq Capital to refinance two apartment complexes totaling 357 units in Santa Ana and Anaheim. The 5.66% debt is interest-only for the 10-year term, according to SVP Michael Elmore in NorthMarq's Newport Beach office, who arranged the financing.

Richard Julian, president of Lake Forest-based Advanced Real Estate, contracted with NorthMarq to consolidate debt and raise funds to acquire additional properties in the Southland. The deal, with funding provided by Wachovia Capital Markets, generated $30 million in cash.

Advanced plans to combine the cash from the refinancing with leverage and existing investor funds to acquire more than $100 million of multifamily properties. The company holds more than 5,000 units in Southern California and hopes to increase that number to more than 6,000 units over the next two years.

The two complexes that Advanced refinanced are the 242-unit Park Plaza Apartments at 801 S. Stevens Santa Ana and the 115-unit Twin Pines Apartments at 2880 W. Ball Rd. in Anaheim, both of which are more than 96% occupied. The Park Plaza complex was built in 1972 and the Twin Pines in 1975.

Advanced, which operates its own in-house construction division, has completed extensive renovations to both of the properties since acquiring them in 2004 for $50 million. The upgrades included granite countertops, new hardwood cabinetry manufactured by the company's construction division, wood flooring, forced air conditioning, accent décor and custom lighting.

Both the interior and exterior renovations have been key drivers to the success of the two complexes, according to Advanced, which points out that materials such as granite countertops, new cabinetry and wood flooring "are typically not found in this segment of the rental market." The company notes that it has achieved rent increase premiums of 20% to 25% as a result of the upgrades.