Buy and Sell: San Francisco

Acquisition Date November 2012
Disposition Date June 2015
Capitalization $6.10 million
Investment Rationale Multifamily and retail property located in the improving Union Square submarket of San Francisco. Asset suffered from significant deferred maintenance and poor management. Our strategy was to improve rents through major upgrades to the exterior, common areas and unit interiors; implement capital-improvement and other passthroughs; aggressively re-lease commercial storefront suites; and engage new revenue streams (for example, adding an onsite laundry facility).
Current Status Property was sold for $10.5 million, generating a 51.6% project-level IRR and equity multiple of 2.24x over 31 months.

Buy and Refinance: Pasadena

Acquisition Date March 2013
Capitalization $4.44 million
Investment Rationale Property is located in close proximity to the South Lake Shopping District and one mile from Old Town Pasadena and Civic Center. The building provided the opportunity to improve the tenant profile with students from CalTech and the Culinary Academy after a full renovation of the lobby, addition of a workout room and unit interior upgrades.
Current Status Property was refinanced after two and a half years of ownership, returning 100% of initial equity to investors. The property currently generates yearly cash flows of approximately $60,000.

Buy and Exchange: San Francisco to San Diego

Acquisition Date October 2013/November 2016
Capitalization $10.7 million to $29.2 million
Investment Rationale Two property portfolio located in the Lower Nob Hill submarket of San Francisco were acquired from a New York-based opportunity fund which had controlled the debt. Working within San Francisco’s strict rent-control guidelines, we executed lease buyouts of several residents, converted one-bedroom units into more expensive two-bedroom formats, repurposed basement space as rentable storage, implemented passthrough income, and aggressively managed expenses downward. We were able to renovate and re-tenant approximately one-third of the apartments at both buildings, realizing gross revenue increases of 32% in less than 30 months.
Current Status The properties were sold for $18.5 million in August of 2016 for a combined IRR of 30.2% and a 2.16x equity multiple over 36 months. The proceeds from the sale of the properties were exchanged into the acquisition of a $29.2 million, 2010-vintage 85-unit property in downtown San Diego.