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[IMGCAP(1)]LAKE FOREST, CA-Advanced Real Estate Services Inc. has closed on the $23.5 million acquisition of the 172-unit Serena Vista Apartments in Fountain Valley and, in a separate deal, on the $9 million bulk purchase of 39 units at Las Brisas condominiums in Huntington Beach. With the closing of these latest deals, Lake Forest-based ARES has closed three multifamily transactions in the last month in Orange County totaling more than 400 units and approximately $60 million.

The Serena Vista Apartments, at 10300 La Hacienda Ave. in Fountain Valley, is a two-story complex that consists of 68 two-bedroom units and 104 one-bedroom units. The property was over 90% occupied at closing.

[IMGCAP(2)]Rick Julian, President of Advanced Real Estate Services, notes that ARES has “a significant amount of equity that needs to be placed” and that ARES–with a 30-year investment record–is actively acquiring apartment properties in Southern California with a large base of privately placed equity. ARES assumed an existing Fannie Mae financing with a fixed rate of 4.95% in acquiring Serena Vista. Advanced Management Co. will take over the day-to-day operations of the property, which was built in 1970 and features units that average 831 square feet.

ARES acquired the property from Security Properties Inc. LLC of Seattle in a transaction that was brokered by Joe Leon of the Newport Beach office of Hendricks & Partners and Shane Shafer of the Hendricks & Partners North Orange County office. The deal closed at a cap rate of approximately 6.25% with 6.75 cash-on-cash return, according to the Hendricks brokers, who note that the complex was renovated in 2008 at a cost of more than $5,100 per unit.

One of the driving forces for the sale was the fact that the building was below replacement cost in an in-fill area where no new apartment buildings of 100 units or more have been built in the past 13 years, according to Leon and Shafer.

In the Huntington Beach acquisition of the Las Brisas condominiums, which are at 7935 Bay Dr., ARES acquired the condos from a community bank that had foreclosed on the property. Julian notes that this is the second bulk purchase ARES has acquired in the past 12 months from financial institutions.

The condos are all two-bedroom units that average more than 900 square feet. ARES plans to rent the units for the near term, renovate and ultimately sell them as the market stabilizes.

Julian says that the deal represented “a tremendous opportunity for our REO fund,” which has acquired more than 100 homes. He describes the Las Brisas as “a fantastic property close to the beach, Downtown and the Huntington Beach Pier.”

The Las Brisas sale was brokered by Steve Heri, first vice president with the Anaheim office of CB Richard Ellis Private Client Group, assisted by CBRE associates Peter Gillin and Steve Gim of the Anaheim office. Heri points out that the deal was “a rare bulk condominium opportunity in a prestigious location, one-half mile from the Pacific Ocean.” He adds that one of the factors that helped the deal to close successfully was that ARES, which he describes as one of “many investors seeking high-quality, bank-owned assets,” was “very flexible and creative” in its approach to the transaction.

Privately held ARES specializes in multifamily investments, development, property management and renovations. Its holdings include approximately 6,000 rental units and 200 acres of developable land, all in Southern California.

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