Younan Properties Produces 77% Returns

LOS ANGELES—With its latest sale, Younan Properties produced an impressive 77% return for its investors after only 16 months. The investor sold Younan Executive Center, a 63,305-square class-A office property in Simi Valley, to an unnamed investor. Younan purchased the asset in 2014, and subsequently leased it up to produce the phenomenal returns.

"We did not intend to sell the asset because it was 100% leased for 10 years to a stable government tenant," Zaya Younan, chairman and CEO of Younan Properties, tells GlobeSt.com. "We were hoping to just enjoy the cash flow from it, but an unsolicited offer came in and we couldn't refuse it. We decided to sell the property and redeploy the capital into other acquisitions. It wasn't our intention to sell, but the buyer recognized that this was a good stabilized asset with long-term cash flow."

The property sits on a 6.3-acre park and is 100% leased to Vision Mechanical Services and the County of Ventura. "We purchased this asset totally vacant. It was vacant for three-to-four years prior to when we bought it. We worked really hard to reposition the asset," adds Younan. The property has views of the mountain and direct access to the 118 freeway.

They originally acquired the property as part of their Los Angeles expansion, and it produced even more impressive returns than they projected. "We usually get a 10-12% investor return, and we were hoping on this asset, because it had a lot of potential, that we could realize 18% IRR," Younan says. "Because of the value of the leases and the value of the sale price, the actual IRR came up significantly higher."

The firm will reinvest the proceeds from the property into other acquisition opportunities that allow the firm to create value in some way. They continue to be bullish on the Los Angeles market. "Our strategy is to continue to look for assets in Southern California that we feel we can add value though a repositioning or rehab. I can assure you that it is far more difficult to find assets now," Younan says. "The market is getting very hot. There is too much cash chancing too few of deals, and this is the first time that we have gone four or five months without being able to acquire anything. It is extremely difficult to find assets to acquire."

Mark T. Leonard, SVP and principal of Lee & Associates-LA North/Ventura office represented Younan Properties in the transaction.