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Stepp Commercial represented both sides in the sale of Patio Gardens, a 127-unit apartment community in Long Beach, Calif., which sold for $50.8 million.
HFH Limited acquired the property from a Long Beach-based private investor, and the buyer assumed the existing JPMorgan Chase loan with a 55-percent down payment.
“The buyer was trading out of a rent-control market in Northern California, so this asset being located in the non-rent control market of Long Beach was very attractive,” Robert Stepp, Stepp Commercial’s principal, told MHN. “Additionally, while the price-per-unit is high, the property is a true value-add deal with a ton of upside potential. As a 1958 vintage property, there is a lot of opportunity to modernize the units and the property overall to meet the demand in the market.”
The deal also made sense for the seller, who originally acquired the property two years ago for a little more than $35 million.
“They were looking to move their equity out of state and increase their cash flow,” Stepp said.
Patio Gardens’ units are all two-bedroom units with an average of 1,000 square feet. Nearly 80 percent of the units include patios. Besides offering a lot of greenery and outdoor patio space, property amenities include a fitness center, ample laundry facilities and parking.
DEMAND IN TRAFFIC CIRCLE
Located at 4874 East Los Coyotes Diagonal, in the Traffic Circle neighborhood, the community consists of 19, two-story buildings fronting Los Coyotes Diagonal. The property sits on nearly six acres of land in one of the best rental markets in Long Beach, which is a few miles from Cal State Long Beach.
“The Traffic Circle area is so popular as a rental market because of its convenient, central location—just a mile from the 405-Freeway, two miles from Cal State Long Beach, easily accessible to Pacific Coast Highway, Highway 22, Lakewood Boulevard, etc.,” Stepp said. “About 15 percent of the units are leased to college students.”
There also is a wide variety of retail and restaurant amenities and commercial developments within walking distance; Kaiser Medical Center as well as Community Medical Center are close by, as well as highly rated schools in the area.
The buyer plans to enhance building exterior elements and landscaping and also plans to modernize all of the unit interiors, which includes taking down some walls in the kitchens to open up the floor plans.
“The buyer will also install in-unit washers and dryers, which will free up the space taken up by the seven on-site laundry facilities, and provide an opportunity to create additional property amenities such as spa/Jacuzzi areas and/or community entertainment rooms,” Stepp said.
In June, Stepp Commercial arranged the sale of San Antonio Apartments, a 20-unit community in Long Beach, Calif., for $4.9 million. In March, the company completed the $10 million sale of another Long Beach apartment community near the city’s famed Traffic Circle.
