By Andie Lowenstein, Associate Editor
Burbank, Calif.—In a Golden State market of scarce value-add commercial real estate, there are still some hidden gems waiting to be found.
Interstate Equities Corporation (IEC) acquired an off-market, 34-unit multifamily property walkable from downtown Burbank, Calif.
“This property is the type of ‘diamond in the rough’ that we target,” said Marshall Boyd, president of IEC. “Built in 1958, the community has never been renovated, making it perfectly poised for the type of transformation that IEC is known for.”
Situated on 0.4 acres approximately a mile east of downtown Burbank, the asset meets all of IEC’s firm acquisition requirements, a strategic approach that has been successful for the firm’s institutional investors across the country.
“Our niche is well located, scrappy deals,” said IEC Director Peter Casey. “By pinpointing our focus and acquiring multifamily properties in Southern California and the Bay Area that are significantly undermanaged, we are able to deliver extremely attractive yields and risk adjusted returns to our investors.”
IEC, an institutional fund manager, invests in properties for endowments, family offices and pension funds. The firm has been in investment management for more than 35 years. The firm has carried nearly 85 properties full-cycle for its investors and completed more than $1.5 million in real estate transactions since 2006.
The new asset, Citra Apartments, will face numerous improvements that will allow IEC to increase rental rates by nearly $500 per unit in just three to six months, said Boyd.
The firm plans to renovate the community’s run down swimming pool, which is currently a safety hazard for approximately 12 units that face direct in front of it. In its place will be a modern lounge for resident interaction and engagement. IEC will be doing thorough interior and exterior improvements as well, including new flooring, paint and appliances, along with a contemporary rooftop deck.
“By eliminating safety hazards, introducing conveniences, and creating a fresh, modern aesthetic throughout the property, we will attract a strong and consistent renter base,” said Boyd, adding that IEC isn’t joining the bandwagon on apartment owners’ current Millennial craze.
“We don’t specifically target Millennials,” he said. “What we’re doing is straightforward and strategic. We’re buying well-located, run-down product and converting it into quality housing that will attract renters of all ages.”
Boyd continued, “Even with the substantial rent increase we will achieve in this asset, renters will still be paying less than $1,600 per month for a one-bedroom apartment in walking distance to downtown Burbank. That level of pricing is nearly impossible to find in this area.”
Located at 700 S. 6th Street in Burbank, Citra Apartments was acquired for $6.7 million from a Los Angeles-based second-generation family owner. Bryan Schellinger and Tyler Martin of ARA Newmark represented IEC through the acquisition.