Investors Buy 59 Units in Three Apartment Deals

The exchange buyer was Los Angeles-based Monem Corp., a private investment firm focused on acquiring value-added multifamily properties in Los Angeles County. Monem bought a 24-unit complex at 5463 Carlton Way in Los Angeles for $3.3 million after selling a seven-unit complex at 3545 Keystone Ave. in Los Angeles from Keystone Properties LLC for more than $1.41 million.

At a time when every deal that closes raises the question, "How was it financed?" Monem Corp. president Danny Monempour comments: "Though the financial market continues to struggle, we were able to secure a very attractive three-year fixed-loan at 6% with 30% down to acquire Carlton Way." Built in 1965, the 5463 Carlton Way complex is 100% leased and features 14 one-bedroom/one bathroom units and 10 two bedroom/two bathroom units. Rents range from $650 to $1,800.

Monempour, who says that Monem Corp. is looking to acquire more multifamily properties in the Los Angeles area, notes that his firm's $1.41 million sale of the Keystone Avenue property resulted after an unsolicited offer. Monem bought the property for $990,000 in 2005. Both Monem and the seller were represented by Tony Azzi of Marcus & Millichap in the acquisition on Carlton Way.

The Koreatown buyer was Lion Real Estate Group, which bought an 18-unit apartment building at 724 S. Berendo St., about a block and a half south of Wilshire Boulevard in what Lion calls a "Prime Koreatown" location. Lion paid $3.1 million for the property, which it bought from a private investor.

The acquisition marks the second investment in Koreatown for Lion, a privately held firm that was founded early this year to focus on value-added and opportunistic multifamily properties in Los Angeles. Lion's principals say they are actively pursuing other investment opportunities that should enable them to reach 100 units in the area by year's end.

The other Koreatown complex that Lion bought was a 12-unit, non-rent-controlled property. Mory Barak, a principal of Lion Real Estate Group, describes Koreatown as "unlike any other sub market in Los Angeles from an investment perspective." Vacancy rates are lower than the rest of Los Angeles and rents are increasing, but valuations have not kept up with the surrounding sub markets, Barak says. As a result, "Koreatown presents great investment opportunities," he says.

Lion plans to renovate both the exterior of the 724 S. Berendo St. building and its vacant units immediately. The firm has tapped Form+Function Design Group to come up with the design scheme for the building and assist with the renovation, which is expected to take three to four months.

Lion Group principal Jeff Weller notes that rents for the property, which had five vacancies at the time of closing, are approximately 15% to 20% below average for the area. Lion plans to increase rents to market upon completion of the renovation and aims to be 100% occupied within six months of closing, Weller says. "Our goal is to stabilize the property in 12 to 18 months."

In the third deal, a Los Angeles-based private investor bought a 17-unit complex at 9116 Palm St. in Bellflower for $2.1 million from a Temecula, CA-based private investor who was represented by Pat Swanson and Nordee S. Saritvanich of Sperry Van Ness Real Estate Services in Irvine, CA. The buyer was represented by Y.K. Liang of Century 21.

The property, which was built in 1963, features eight one bedroom/one bath units, eight two bedroom/1.5 bath units and one non-conforming unit. It was 100% occupied at the time of the sale, with rents ranging from $895 to $1,195.