Downey Market Is An Investor Haven

DOWNEY, CA—Downey may be the next hot market for Los Angeles value-add investors. The Bascom Group has purchased the Square, a 112-unit apartment complex in Downey for $25.5 million, citing the market's strong job growth and access to entertainment centers in Los Angeles and Orange County as major appeals to the purchase. This is the investor's 13^th acquisition in California this year.  

“There is a tremendous demand for rental housing in the Downey submarket,” Chad Sanderson, a principal at the Bascom Group, tells GlobeSt.com. “We see that market has incredibly strong occupancies right now; there is job creation in that area and there is a real desire for tenants to be able to find areas that are attractive from a value standpoint and still be close to job and entertainment centers, like Los Angeles and Orange County. Downey is really an ideal market that allows people to access both of those job and entertainment centers.”

In addition to its prime location, the submarket itself is undergoing a mini renaissance. Within a half-mile of the property, there is a 600,000-square-foot entertainment-driven retail center underway, so the immediate area was another driver for Bascom's interest. Other value-add investors have also been scooping up opportunities. Earlier this year, for example, Pendo Investments bought a 95-unit apartment complex in the submarket for approximately $20 million with plans to invest an additional $12,000 per unit into the property.

The Bascom Group plans to renovate the Square, although it would not disclose its capital investment. “We are going to be doing a modest renovation and some modest enhancements to the exteriors with a multi-color paint scheme,” says Sanderson. In general, the Bascom Group tends to hold its properties for four to five years.

The investor financed $18.8 million of the purchase, securing a loan through California Bank & Trust. Brian Eisendrath, Brandon Smith and Annie Rice of CBRE Capital Markets arranged the financing, while Shane Shaeffer and Adrienne Barr of Berkadia represented Bascom in the sale transaction.

Located at 12517 Brookshire Avenue in Downey, the property has a mix of one-, two- and three-bedroom apartments in 15 two-story buildings. The property is on 3.4 acres.