A nationwide apartment push by Olen Properties has seen the Newport Beach-based real estate owner and investor make its first acquisition in the Atlanta area while ramping up development in other markets outside Orange County.
Olen recently completed the purchase of a high-end apartment complex in Atlanta and in one of the city’s suburbs, picking up about 700 units.
The purchases included the Reserve at West Paces, a midrise project in the affluent Buckhead district, and Seven Pines, a lowrise project in the Alpharetta area.
“This is Olen’s new entry into this market, and we plan to expand in Atlanta in the coming year,” said Igor Olenicoff, Olen’s president.
Terms of the purchases weren’t disclosed. High-end apartments in the Atlanta region have been trading hands anywhere from $100,000 to $160,000 per unit over the past year, according to local brokerage data.
The midpoint of that range would put a nearly $90 million price tag on the two properties, which were sold by affiliates of Chicago-based Heitman LLC.
Olen is the latest OC-based investor to tap Atlanta’s apartment market in the past few months.
Affiliates of Steadfast Cos. in Irvine have spent $147.5 million since October to buy a pair of complexes in the region totaling nearly 1,200 apartments units.
In November, an affiliate of Irvine-based Bascom Group paid a reported $30 million for The Laurels at Overlook Park, a 232-unit complex about 10 miles north of downtown Atlanta.
Strong Market
The average rent in Atlanta’s apartment market increased by 7.6% in the 12 months through November, according to a recent report by Dallas-based market research firm Axiometrics Inc., and occupancy was at 93.9%.
It was the seventh-best-performing market in the country over that time and the third- best-performing market outside California, according to Axiometrics.
The Atlanta-area acquisitions are the largest reported this year by Olen, a privately held company with a commercial real estate portfolio that includes 10,000 apartment units and more than 7.5 million square feet of office and industrial space.
Olen is believed to be the second-largest commercial real estate owner in Orange County next to Newport Beach-based Irvine Company. It hasn’t made large local purchases or announced development plans here since acquiring an office complex in the Irvine Spectrum in 2013 for $73.5 million.
Finding land in the area “to develop or purchase existing projects is not an easy task, as there is a lot of money chasing a few deals that do become available,” said Olenicoff, who added that his company is nonetheless on the lookout for acquisitions in OC.
Olen is finding more opportunities to develop in its other existing markets: Florida, Nevada and Arizona.
Multifamily development, in particular, is a focus of the company right now, according to Olenicoff, OC’s second-wealthiest resident, with an estimated fortune of $3.2 billion.
“Demand nationally for apartments has never been stronger,” he said.
Olenicoff said his company’s portfolio has occupancy rates of nearly 97%.
Olen recently completed apartment projects that combine for 168 units at a pair of waterfront properties in the Palm Beach, Fla., area. It plans to build an additional 188 units in the next year at two sites it owns in the area, according to Olenicoff.
In Arizona, the company owns land near the entrance to the Phoenix Sky Harbor International Airport, where a 560-unit complex called Gateway is being built with a scheduled opening next year.
“Olen has owned the site for some time and is waiting for the right time to break ground,” Olenicoff said.
Active Lender
Olen’s biggest source of new business besides apartment development these days is as a real estate lender to third parties.
The business “is doing well and growing,” said Olenicoff, who made waves in 2013 by lending more than $100 million for prominent properties, including Alameda Square in Los Angeles and a hotel in downtown Chicago.
He estimated that Olen made $140 million worth of loan deals over the past year.
Much of the company’s latest lending deals were for properties in California, including an oceanfront ranch in Cambria, a winery, a solar farm, a former Alta Dena dairy farm in Los Angeles County that’s being turned into a residential development, and industrial developments in the Inland Empire.
Olenicoff said he’s also made loans for “several large private homes in Orange County.”
Deals for projects outside of California include loans for a resort on the Hawaiian island of Kauai and a construction loan for an Atlanta apartment complex under redevelopment.
The lending is “a nice use of our liquidity until we find a better use for it in the development and acquisition arena,” Olenicoff said.
Olen’s own local debt load is decreasing, according to Olenicoff.
“We have continued to pay off our mortgages as they come due here and have substantially paid off most of Olen’s mortgages in Orange County.”