L.A. Buyer Sees Upside in $16M Property

Built in 1987, the freestanding two-story office building was 94% occupied at the time of the sale, which was brokered by Brian Garbutt from Lee & Associates. Seltzer tells GlobeSt.com that Highpoint plans to fully renovate the property, including a full upgrade of the lobby and common areas.

Seltzer tells GlobeSt.com that Highpoint's renovations will significantly improve both the systems and the cosmetic appeal of the building, which the company acquired with its investor base. "This deal was complicated as the in-place rental rates were significantly below market, [approximately 30%]," Seltzer observes.

Seltzer adds that Highpoint, which purchased the building at an approximately 5% cap rate, believes that "there is significant upside in the deal with turnover in the rent roll along with the fact that we purchased it at $204 per sf while comparable buildings in the market are selling between $250 per sf to $300 per sf." The acquisition is one of three deals that Highpoint has either closed or is about to close in Southern California, including a $13-million office property in Los Angeles and a $7.5-million retail deal in Rancho Mirage.

Highpoint Capital focuses on acquiring office, industrial and retail buildings ranging from $5 million to $100 million, typically specializing in complicated deals including properties that are encumbered with conduit debt or high interest rate loans, properties encumbered by land leases, buildings with high vacancies or properties that are 100% vacant or mismanaged. While so far all of the company's acquisitions have been in California, it is pursuing opportunities throughout the western US, including properties in Texas, Colorado, Nevada and Washington.

Seltzer, who was director of acquisitions at Adler Realty Investments in Woodland Hills before founding Highpoint, has more than 10 years of commercial real estate experience in acquisitions, dispositions, investment analysis, property development and asset management. Before joining Adler, he served as asset manager for Blackstone Real Estate Advisors in New York.