AIMCO Buys Huge Stake in L.A. Multifamily

Denver-based investor Apartment Investment and Management Company, also known as AIMCO, has acquired the final 47% interest in the Palazzo joint venture, which is owned and operated by J.P. Morgan Asset Management, in a transaction valued at $451.5 million. The deal gives AIMCO 100% ownership of three Palazzo properties, all in the Mid-City submarket of Los Angeles: Palazzo at Park La Brea, Palazzo East and Villas at Park La Brea.

“The Palazzo communities are well-located properties in a desirable sub-market,” Paul Beldin, CFO of AIMCO, tells GlobeSt.com. “We are always looking for investment opportunities that increase the value, quality, and financial returns of our portfolio – and in markets with solid growth prospects and barriers to entry.  This leverage neutral, paired-trade transaction we expect will result in a 150 basis points higher free cash flow internal rate of return, increase AIMCO average monthly revenue per apartment home by $65, and shift capital from submarkets with lower revenue growth prospects to a submarket with higher rent growth and higher margins.”

The transaction was the final denouement in a 10-year joint venture partnership with J.P. Morgan. AIMCO has operated the properties since their construction in 2002. “We've operated these communities since their construction 15 years ago,” says Beldin. “We know them well, and we know the market well. The Mid-Wilshire submarket has highly educated and high-income customers. These residents and potential residents value the area and amenities, including transportation centers, jobs, and upscale retail.  For example, The Grove is just across the street.”

AIMCO is going to hold onto the properties for the long-term, and plans to redevelop each as needed. “In addition to continuing to operate them, we anticipate that we will redevelop each of them, over time as the market conditions make sense,” says Belden. “We anticipate that our redevelopments will differentiate the communities to serve distinct market segments.”

Denver-based investor Apartment Investment and Management Company, also known as AIMCO, has acquired the final 47% interest in the Palazzo joint venture, which is owned and operated by J.P. Morgan Asset Management, in a transaction valued at $451.5 million. The deal gives AIMCO 100% ownership of three Palazzo properties, all in the Mid-City submarket of Los Angeles: Palazzo at Park La Brea, Palazzo East and Villas at Park La Brea.

“The Palazzo communities are well-located properties in a desirable sub-market,” Paul Beldin, CFO of AIMCO, tells GlobeSt.com. “We are always looking for investment opportunities that increase the value, quality, and financial returns of our portfolio – and in markets with solid growth prospects and barriers to entry.  This leverage neutral, paired-trade transaction we expect will result in a 150 basis points higher free cash flow internal rate of return, increase AIMCO average monthly revenue per apartment home by $65, and shift capital from submarkets with lower revenue growth prospects to a submarket with higher rent growth and higher margins.”

The transaction was the final denouement in a 10-year joint venture partnership with J.P. Morgan. AIMCO has operated the properties since their construction in 2002. “We've operated these communities since their construction 15 years ago,” says Beldin. “We know them well, and we know the market well. The Mid-Wilshire submarket has highly educated and high-income customers. These residents and potential residents value the area and amenities, including transportation centers, jobs, and upscale retail.  For example, The Grove is just across the street.”

AIMCO is going to hold onto the properties for the long-term, and plans to redevelop each as needed. “In addition to continuing to operate them, we anticipate that we will redevelop each of them, over time as the market conditions make sense,” says Belden. “We anticipate that our redevelopments will differentiate the communities to serve distinct market segments.”