HFH Ltd. acquired the property from a Long Beach-based private investor, and the buyer assumed the existing JPMorgan Chase loan with a 55-percent down payment.
The buyer was striving to refocus its portfolio away from Northern California and closer to its headquarters near Los Angeles International Airport, according to HFH senior real estate associate Eric Kang. Through a 1031 exchange, it traded two office assets in Emeryville for the multifamily property.
“Additionally, while the price-per-unit is high, the property is a true value-add deal with a ton of upside potential,” Robert Stepp, Stepp Commercial’s principal, told MHN. “As a 1958 vintage property, there is a lot of opportunity to modernize the units and the property overall to meet the demand in the market.”
The deal also made sense for the seller, which had acquired the property two years ago for $35.3 million.
“They were looking to move their equity out of state and increase their cash flow,” Stepp said.
Patio Gardens’ units are all two bedrooms with an average of 1,000 square feet. Nearly 80 percent of the units include patios. Besides offering a lot of greenery and outdoor patio space, property amenities include a fitness center, ample laundry facilities and parking.
Demand in Traffic Circle
Located at 4874 East Los Coyotes Diagonal, in the Traffic Circle neighborhood, the community consists of 19, two-story buildings fronting Los Coyotes Diagonal. The property sits on nearly five acres of land in one of the best rental markets in Long Beach, a few miles from Cal State Long Beach.
“The Traffic Circle area is so popular as a rental market because of its convenient, central location—just a mile from the 405-Freeway, two miles from Cal State Long Beach, easily accessible to the Pacific Coast Highway, Highway 22, Lakewood Boulevard, etc.,” Stepp said. “About 15 percent of the units are leased to college students.”
There also is a wide variety of retail and restaurant amenities and commercial developments within walking distance; Kaiser Medical Center as well as Community Medical Center are close by, and the area boasts highly rated schools.
The buyer plans to enhance building exterior elements and landscaping and also plans to modernize all of the unit interiors, which includes taking down some walls in the kitchens to open up the floor plans.
In June, Stepp Commercial arranged the sale of San Antonio Apartments, a 20-unit community in Long Beach, Calif., for $4.9 million. In March, the company completed the $10 million sale of another Long Beach apartment community near the city’s famed Traffic Circle.