A New Strategy for Acquisitions

Why TruAmerica is looking for properties in blue- and gray-collar areas.

Los Angeles—A number of entities, including TruAmerica Multifamily LLC, Guardian Life, Allstate and a large offshore institutional investor, have formed a $522 million multifamily-oriented joint venture. CBRE is acting as the financial advisor to the newly formed joint venture.

The partners will acquire a 14-property southern California value-add multifamily portfolio from JH Real Estate Partners Inc. of Newport Beach, Calif. The 2,669-unit portfolio is spread across Los Angeles County, San Diego County and the Inland Empire.

TruAmerica has more than $3 billion in assets under management, and plans to invest about $40 million in upgrades to the assets, which were built in the 1980s and 1990s. The work will include the installation of new cabinets, floors, appliances, fitness centers and common areas.

CBRE executive managing director Imran Ahmed noted that TruAmerica is acquiring vintage buildings located in blue- and “gray-collar” (often taken to mean service workers) neighborhoods. The strategy, he said, is to renovate the units and reposition the properties as higher-end: a better living experience for the residents, while generating a better return for the investors.

Class B apartment rent growth nationwide rose from 3.1 percent during Q3 2013 to 5 percent in Q3 2014—a 61 percent increase year-over-year, according to CBRE research. In the greater Los Angeles area, Class B rent growth rose from 3.1 percent to 6.3 percent, a 103 percent increase during the same time period.