In Some Cases, Older Value-Add Deals Make Sense

NATIONAL CITY, CA—For select opportunities in Southern California, Lighthouse Partners will expand its search criteria to include properties built in the 1970s and 1980s, principal Andrew Newton tells GlobeSt.com. As we recently reported, the firm has acquired Centro Condominiums, a 61-unit community here, for $15.8 million (or $259,016 per unit) from what industry sources indicate was seller Birge & Held. We spoke exclusively with Newton and partner Jeffrey Fuller about the transaction, what the Irvine, CA-based company likes about the San Diego multifamily market and what it looks for in the properties it acquires.

GlobeSt.com: What do you like about the San Diego market in general?

Newton: The San Diego MSA has a population in excess of three million residents, making it one of the most populous markets in California. Frequently regarded as an 18-hour city, it is consistently ranked among the most desirable places to live and work. It offers a well-educated, diversified employment base with key industries being defense, medical, biotechnology, education and tourism. The cost of homeownership, coupled with the projected population and employment growth should continue to drive demand for apartment housing and rental growth.

GlobeSt.com: Why does the National City market intrigue you?

Newton: National City encompasses a large area stretching from San Diego Bay and past the 805 freeway. Centro is located in the northwest portion of National City, across the street from the city hall, the police department, Kimball Park and other municipal offices. Residents at Centro enjoy a short commute to the major employment centers of Downtown San Diego and Naval Base San Diego via the adjacent 5 freeway, Harbor Drive or utilizing the San Diego trolley at the nearby 8^th St. station. Centro offers residents a strong value proposition by being a newer constructed community, located only a 10-minute drive to Downtown San Diego but being at a rental price point significantly less than similar communities found in Downtown.

GlobeSt.com: What do you look for in the markets and properties in which you invest?

Fuller: We are actively searching for opportunities in major metros of the Western US that exhibit steady population and employment-growth projections. For all markets, we look to ensure there are barriers to entry and a favorable balance between apartment demand and new supply of inventory. Typically, we are looking to acquire properties constructed post-1990 that offer some value-add potential through a light renovation program and operational improvements. For select opportunities in Southern California, we would expand the search criteria to include properties built in the 1970s and 1980s. Our ideal transaction size is between $5 million and $30 million.

GlobeSt.com: What else should our readers know about this latest transaction?

Fuller: Centro represents our firm's first acquisition in Southern California. Lighthouse Partners' source of equity to complete the Centro transaction was from its deep network of accredited investors. Through our private offerings, we provide individuals an opportunity to invest directly in institutional-quality multifamily real estate. We are continually looking to grow our database of accredited investors and joint-venture relationships. We anticipate that Centro will be the first of many other acquisitions in San Diego.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

NATIONAL CITY, CA—For select opportunities in Southern California, Lighthouse Partners will expand its search criteria to include properties built in the 1970s and 1980s, principal Andrew Newton tells GlobeSt.com. As we recently reported, the firm has acquired Centro Condominiums, a 61-unit community here, for $15.8 million (or $259,016 per unit) from what industry sources indicate was seller Birge & Held. We spoke exclusively with Newton and partner Jeffrey Fuller about the transaction, what the Irvine, CA-based company likes about the San Diego multifamily market and what it looks for in the properties it acquires.

GlobeSt.com: What do you like about the San Diego market in general?

Newton: The San Diego MSA has a population in excess of three million residents, making it one of the most populous markets in California. Frequently regarded as an 18-hour city, it is consistently ranked among the most desirable places to live and work. It offers a well-educated, diversified employment base with key industries being defense, medical, biotechnology, education and tourism. The cost of homeownership, coupled with the projected population and employment growth should continue to drive demand for apartment housing and rental growth.

GlobeSt.com: Why does the National City market intrigue you?

Newton: National City encompasses a large area stretching from San Diego Bay and past the 805 freeway. Centro is located in the northwest portion of National City, across the street from the city hall, the police department, Kimball Park and other municipal offices. Residents at Centro enjoy a short commute to the major employment centers of Downtown San Diego and Naval Base San Diego via the adjacent 5 freeway, Harbor Drive or utilizing the San Diego trolley at the nearby 8^th St. station. Centro offers residents a strong value proposition by being a newer constructed community, located only a 10-minute drive to Downtown San Diego but being at a rental price point significantly less than similar communities found in Downtown.

GlobeSt.com: What do you look for in the markets and properties in which you invest?

Fuller: We are actively searching for opportunities in major metros of the Western US that exhibit steady population and employment-growth projections. For all markets, we look to ensure there are barriers to entry and a favorable balance between apartment demand and new supply of inventory. Typically, we are looking to acquire properties constructed post-1990 that offer some value-add potential through a light renovation program and operational improvements. For select opportunities in Southern California, we would expand the search criteria to include properties built in the 1970s and 1980s. Our ideal transaction size is between $5 million and $30 million.

GlobeSt.com: What else should our readers know about this latest transaction?

Fuller: Centro represents our firm's first acquisition in Southern California. Lighthouse Partners' source of equity to complete the Centro transaction was from its deep network of accredited investors. Through our private offerings, we provide individuals an opportunity to invest directly in institutional-quality multifamily real estate. We are continually looking to grow our database of accredited investors and joint-venture relationships. We anticipate that Centro will be the first of many other acquisitions in San Diego.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.