Socal Multiunit Real Estate

HOLLYWOOD BUILDS APARTMENTS FOR THE HOMELESS

HOLLYWOOD BUILDS APARTMENTS FOR THE HOMELESS

Hooray for Hollywood! Finally other cities besides Santa Monica are stepping up to help the homeless. The Community Redevelopment Agency has approved a plan for a $27 million, 70-unit multifamily development called the Villages at Gower that will be designed to house the formerly homeless and will be developed by A Community of Friends (ACOF) and PATH Ventures. The CRA considers the project “a highly unusual affordable housing development for formerly homeless persons that provides comprehensive support services in a campus setting.”

Pending approval by the Los Angeles City Council approval, the project will be built on CRA/LA land at 1726 N. Gower St. The CRA sees the new project as one way of “delivering on (Mayor Antonio Villaraigosa’s) commitment to build permanent supportive housing for the homeless,”says Cecilia V. Estolano, CRA’s chief executive officer. The project, expected to be mainly financed by tax credits, supplemented by a variety of public and private funding, is slated to start construction in November. It will serve will serve adults and families who are homeless and have special needs, Gallo explains.

Composed of 15 studios, 20 two-bedroom and 35 one-bedroom units, the four-level building will include a community room and administrative facilities. Open space surrounding the building will provide ample opportunities for outdoor recreational activities.

The development is conceived as a “campus of hope for the homeless,” according to principal Wade Killefer of Santa Monica-based Killefer Flammang Architects, the designer for the project. Killefer is former chair of Lamp Community, an organization that develops housing specifically for the mentally ill homeless.

“The zinc-clad building, which is being designed to Silver LEED certification standards, will provide residents with lots of light and project a contemporary profile rather than an institutional setting, emphasizes Will Longyear, KFA designer and project manager. On-site services will include counseling, employment and training services, parenting classes, independent living skills, after-school tutoring and nutrition and cooking workshops. Off-site medical and mental health services also will be provided to residents.

The city and the county consider the Villas at Gower a pilot project and, possibly, a model for housing developments for homeless people with special needs.

http://www.cityfeet.com/News/NewsArticle.aspx?Id=30552

APARTMENT BUILDING PRICES PREDICTED TO STAY STRONG

APARTMENT BUILDINGS APPEAL TO INVESTORS A recent survey of 1,000 seasoned real estate Apartments and mixed-use assets are the most attractive investments at the moment. According to the 2008 Real Estate Investor Outlook, 33 percent of investors say they’ll enter the apartment sector in the next 12 months, and 19 percent indicate they’ll enter or expand into the mixed-use sector.  Office properties and retail assets rank far lower with investors, according than the volume of transactions during the first three quarters of 2007, according to Real CapitalAnalytics. Much of the investor interest in apartments is driven by the weakness in the housing sector and continued upheaval in the mortgage markets. “With both the condo market and the single-family home market falling apart, people have to live somewhere, so they’re going to rent apartments,” observes Dennis Yeskey, national director of Deloitte& Touche LLP’s Real Estate Capital Markets Group. Investors have grown increasingly more interested in the apartment sector. In 2004, for example, roughly $51 billion worth of apartment assets changed hands in the U.S. – about $1 billion less than the volume of transactions during the first three quarters of2007. “We like the demographic and demand trends in the sector because affordability of single-family housing is out of reach of many people,” explains Bob Dougherty, chief acquisitions officer with Buchanan Street Partners. This year, the company is on track to close $325 million to $350 million in new equity investments. Next year, it is shooting for $400 million to $450 million. Dougherty, like many other investors, expects apartments to benefit from increased pricing and rental rates. As much as 75% of investors who are currently invested inapartment properties predict an increase in effective rents, and nearly one-third expect to see an increase in the market pricing of apartment properties. More than half of those who invest in apartments expect at lease a slight increase in cap rates. In October 2007, the average cap rate for apartment properties was six percent and the average price per unit was $104,857, according to Real Capital Analytics. To compare, the average cap rate in 2004 was 8.66 percent and the average price perunit was $67,776.  Alan George, chief investment officer for Equity Residential, says cap rates for Class Band C apartment properties have increased 25 basis points and 75 basis points, respectively, in the past year. “I think cap rates for those types of assets has plateaued,and I wouldn’t expect more of an increase in 2008,” he notes, adding that Class A caprates have moved very little.

CALIFORNIA ENDORSES STATEWIDE GREEN BUILDING CODE + LOOKS TOWARD 2010

CALIFORNIA ENDORSES STATEWIDE GREEN BUILDING CODE + LOOKS TOWARD 2010

When it comes to green building, California continues to lead the way in adopting environmentally-friendly building codes. Most recently, the California Building Standards Commission has taken the opportunity, along with other state agencies, to develop green building standards that will establish California as a leader in the efforts to reduce greenhouse gas emissions from structures. This is part of an ongoing evolution of how California will build.

“By adopting this first-in-the-nation statewide green building code, California is again leading the way to fight climate change and protect the environment. This is literally a groundbreaking move to ensure that when we break ground on all new buildings in the Golden State we are promoting green building and energy efficient new technologies,” notes Governor Arnold Schwarzenegger.

The recently amended California Green Building Standards Code, CCR, Title 24, Part 11 now includes mandatory features with a delayed effective date for housing, and voluntary standards for hospitals and other non-residential occupancies. The Commission will continue to work with state agencies and the many stakeholders as we develop a comprehensive set of mandatory provisions in the 2010 edition of the California Green Building Standards Code. “California continues to lead the nation and I commend the hard work of the Building Standards Commission to adopt the first-in-the-nation statewide

green building standards,” proudly observes our Governator. “Cars and buildings are two of the leading users of energy – we’re already addressing cars, and these new building standards will ensure that California remains at the forefront of reducing our carbon footprint and conserving valuable natural resources while also protecting our economy,” he concludes. “We have already committed to making our state-owned buildings more green and energy efficient and this statewide code will reduce greenhouse gas emissions, improve energy efficiency and conserve water in all new buildings.” http://www.bsc.ca.gov/prpsd_stds/default.htm

CAP RATES WILL RISE

CAP RATES WILL RISE 

Cap Rates are predicted to be going up in the next 12 months, marginally, mind you, but they will rise. Let’s look at the statistics, in October 2007, the average cap rate for commercial property was 6.94 percent, according to Real Capital Analytics. In 2006, the average cap rate was 7.12 percent.  Cap rates for top-tier properties are not expected to rise more than 25 basis points while cap rates for lower-tiered properties and markets will increase 50 basis points to 75 basis points, predicts Hessam Nadji, senior vice president and managing director of Marcus & Millichap Research Services.  

“Many cap rates have been predicated on the availability of cheap debt, and that’s driven pricing to artificially high levels,” notes Bob Dougherty, chief acquisitions officer with Buchanan Street Partners “We’ve been underwriting a 100-basis-point increase in cap rates for almost two years because we’ve been expecting a correction. Now we think cap rates will return to historical norms of 200 [basis points] to 300 basis points over Treasuries.”

With the possible rise in the capital gains tax if the democrats get elected this autumn, rising cap rates will make 1031 exchanges that much more interesting. 

Meruelo Maddux Closes $84M Construction Loan For Green Multiunits

Meruelo Maddux Closes $84M Construction Loan For Green Multiunits

Meruelo Maddux Properties has closed on an $84 million construction loan for the locally based development firm’s 35-story, 214-unit multifamily project at 717 W. Ninth St. The project, due to be completed in September 2009, is under way near the Staples Center and L.A. Live projects.

The project, which is seeking a Silver LEED designation, is located at the corner of Flower and Ninth Streets in downtown Los Angeles, across the street from Downtown’s only major supermarket, Ralph’s, adjacent to the financial district and near the new L.A. Live entertainment and dining complex and the Staples Center.

All the info @ http://www.globest.com/news/1213_1216/losangeles/172900-1.html

NEARLY 25% OF SAN FRANCISCO IS UP FOR REZONING

NEARLY 25% OF SAN FRANCISCO IS UP FOR REZONING

In a bold move to accommodate San Francisco’s changing needs, the city is looking to rezone + gentrify four eastside districts. The current plan removes industrial area in favor of mixed use multiunit developments in the Mission Bay district, Showplace Square/Potrero Hill, east SoMa and the central waterfront neighborhoods. Recently approved by the city’s Planning Commission, the project is now before the San Francisco Board of Supervisors.

The proposed plan - which is not unlike New York City’s west side renaissance - takes approximately two-million sf of land zoned for light industrial and rezones it for between 7,500 and 10,000 new housing units over the next 10 years. It also prohibits residential and office from further eroding the industrial base – which San Francisco defines as production, distribution and repair uses– through special permits. During the boom years of the 1990s, dot-coms and residential developers converted a good portion of the area’s buildings into loft-like office space and condominiums.

This rezoning involved years of planning and review, hearings and negotiation so that the city can better manage the evolution. Incorporating some of the most progressive ideas, the plan will purportedly provide incentives meant to spark additional commercial development (light industry, office, retail and restaurants), creates development fees to pay for the necessary infrastructure improvements, and requires residential developers to make some units affordable not only to low-income families but also to middle-income families. It is assumed that all new development will comply with San Francisco’s stringent green building codes.
Nearly 100 projects are said to be in line awaiting the rezoning. If the new zoning is approved as is, there will be a new community improvement fee. At a minimum, builders would be required to pay $8 per sf for residential development and $6 per sf for non-residential construction.

RECAPITALIZING PEGASUS APARTMENTS

The KOR Group has recapitalized the 322-unit Pegasus Apartments complex at 612 S. Flower St. in Downtown L.A., with Newport Beach, CA-based Buchanan Street Partners investing $21.6 million of principal in a new joint venture with KOR that now owns the property. In the recapitalization, which was arranged by the Southern California Capital Markets Group of Cushman & Wakefield, led by managing director Marc Renard.The buyer of the Pegasus is a newly formed joint venture called BSP/KOR, which acquired it from a KOR/Lubert-Adler partnership. The new ownership plans to renovate and upgrade all 322 units.

Santa Monica Realtor Pays $200,000 in Tenant Harassment Case Involving Senior Tenant

Santa Monica Realtor Pays $200,000 in Tenant Harassment Case Involving Senior Tenant

In its largest-ever tenant harassment settlement, the Santa Monica City Attorney’s Office has reached a final agreement with local realtor Stacey Valnes and his wife Megan. The Valneses have paid a total of $200,000 to a former tenant and the City.

The Valneses own a four-unit rental property on Colorado Avenue in Santa Monica.

The City sued the Valneses in Santa Monica Superior Court in June 2007 alleging that just after purchasing the property, they induced 82-year-old tenant Winifred Goodman into vacating her longtime rent-controlled apartment on the false premise that she had to vacate due to an impending owner-occupancy. At the time Goodman vacated, there was no impending owner-occupancy at the property. Goodman, thinking that she had to leave, relocated to Simi Valley and only later learned that she had been deceived.

The lawsuit alleged that shortly after Goodman vacated her apartment, the Valneses re-rented it to a new tenant for $2,400 a month. Goodman had been paying $529 per month.

Santa Monica law prohibits landlords from inducing rent-controlled tenants to vacate their homes through “fraud, intimidation or coercion.”

Goodman later got her own attorney and filed a separate lawsuit against the Valneses. The two cases were consolidated for trial.

The case was scheduled to go to trial this month.

Under the terms of the settlement the Valneses paid Goodman $160,000. The Valneses paid the City $40,000, to be used in its Consumer Protection fund. The fund is used to maximize voluntary compliance with state and local consumer protection and tenant protection laws in Santa Monica, by educating landlords and tenants of their rights and responsibilities.

“This case is a cautionary tale for that small group of landlords who would consider using deception or intimidation to get their tenants to leave,” said Deputy City Attorney Adam Radinsky.