REAL ESTATE – US investor Apollo Real Estate Advisors has broadened its urban residential investment strategy to Los Angeles for the first time with the purchase of 1,002 rental units in the region.
Apollo partner Dean Pentikis who heads up the company’s operation on the US West Coast said: "This transaction will allow us to bring some affordable housing to a market where there is a tremendous need for it. It really is difficult in this market to build new properties because of pricing issues."
Apollo paid around $83m (E61m) to acquire 24 properties where the units are located in: Silverlake, Westlake, Koreatown, Hollywood, West Hollywood and Los Feliz submarkets of Los Angeles.
The assets in the portfolio are a mixture of studio and one-bedroom units ranging in size from 700 to 1,000 ft2 (65.0321m2). Around 900 of the units will continue to be operated subject to the Los Angeles rent stabilisation ordinance.
Apollo is planning on making improvements to the apartments. It has budgeted $20m to fix the properties up over the next five to seven years. The work will include upgrading the lobbies and common areas, landscaping, security, roofs, facades and major building systems. Many of the properties in the portfolio have not been improved for several years.
Pentikis sees that Los Angeles is a very strong apartment market. He said: "Vacancies market wide for apartments in Los Angeles are in the range of 2 to 3%. This makes this area a very attractive place to buy or invest in properties."
Apollo is looking in just a few markets for its urban residential programme. One of its more prominent areas has been around New York, but other markets that it is seeking transactions in are Washington, DC, San Francisco Bay Area, Chicago and Boston. The deals could be for a single asset or an entire portfolio.