ENCINO, CA – After acquiring three multifamily communities in California and Washington last quarter in transactions totaling $74 million, New Standard Equities, Inc., a Los Angeles-based, full-service real estate investment and management company expects to be a net apartment buyer in 2018 as apartment fundamentals in high barrier to entry markets along the West Coast continue to improve.
“Unemployment has remained low, the jobs-to-permit ratio, while degrading due to the denominator side, is still fundamentally positive, and interest rates, despite the recent uptick, are relatively low,” said Edward Ring, founder and CEO of New Standard Equities (NSE). “Although we are seeing a slowdown in the exponential rent growth of the past few years, multifamily remains an attractive asset class, particularly in supply-constrained, high-barrier-to entry infill markets bordering Los Angeles, San Diego and Seattle. We plan to invest up to $200 million over the next 12-18 months.”
Since its founding in 2010, NSE has grown its multifamily portfolio to more than 2000 units, with assets located in California and Washington. In 2018, the firm plans on targeting larger, more complex value-add opportunities in joint venture with its private and institutional capital partners.
A recent example was NSE’s $26 million acquisition of the Mediterranean at Towngate, a 227-unit community in Moreno Valley, CA, 65 miles east of Los Angeles, according to Ring.
“Our joint venture partner, Brixton Capital Group, wanted to bring in some exchange funds, which made the transaction challenging. Plus, there was an affordable housing component with a regulatory agreement on title that included a property tax abatement program, so we had to factor a non-profit co-general partner into the ownership structure,” said Ring. “In addition, the property suffers from a patchwork of architectural and design elements that were sporadically added to the community over the past 40 years.”
Andrew Kirsh, co-founder and head of the real estate practice at Los Angeles-based law firm Sklar Kirsh LLP structured the transaction on behalf of NSE.
“Between 1031 exchange structuring, affordable housing regulations and other intricacies concerning the acquisition, this was a complex transaction, but with the cooperation of all the parties involved, we were still able to achieve a smooth closing prior to the end of the year,” added Kirsh.
In the fourth quarter NSE also acquired the 30-unit Walnut Place Apartments Pasadena for $14 million and the 120-unit Green Leaf Cedar Park in Lynnwood, WA for $24 million. Each project was purchased in separate joint venture syndications, and will benefit from extensive renovation and repositioning programs under the direction of the firm’s in-house construction management team led by Managing Director of Construction Management Todd Weiss and his Pacific Northwest counterpart, Lamarr Wright.
ABOUT NEW STANDARD EQUITIES: Founded in 2010, New Standard Equities (NSE) is a full-service real estate company providing property management, asset management, construction management and project investment. The company deploys private and institutional capital to acquire and operate multifamily assets that offer investors long-term appreciation and cash flow. While it headquarters in Los Angeles, CA, NSE has extensive hands-on experience in all major West Coast markets from San Diego to the Pacific Northwest.
ABOUT SKLAR KIRSH LLP: Sklar Kirsh LLP is a corporate and real estate transactional law firm founded by attorneys from nationally and internationally recognized law firms who provide top tier legal services in an entrepreneurial, sophisticated and focused manner. We counsel privately held and public companies, family offices, growing businesses, and high net worth individuals on legal and business matters that arise at all stages of the business and real estate life cycle, including mergers and acquisitions, purchase and sale agreements, equity and debt financings, fund formation, leasing, corporate governance, tax, executive compensation and employment arrangements, and dispute resolution.