RESIDENTIAL
Western National Properties, the acquisition and development arm of Irvine-based apartment investor and operator Western National Group, is looking to take advantage of the tough market for condominium developers.
The company just raised $200 million for acquisitions and development in Southern California. It’s the company’s second private equity fund. The first raised $50 million, which combined with an additional $20 million in joint venture funds was used to buy nearly 1,500 apartments in the Southland in 2005 and 2006.
Investors this time around include pension funds, life insurance companies and investment banks, as well as individuals.
I wrote about Western National’s plans for the latest fund in mid-2006. Since then, there’s been a big change in the housing market, which should be advantageous for the company, according to Chief Executive Michael Hayde.
In the past four years, condo developers had been paying two to three times the amount apartment developers could for land, according to Hayde. Now, that “activity has virtually halted,” he said.
Western is looking at acquiring land bought by condo developers at a discount. It also could look at taking over “broken” condo developments that now could work better as apartments.
There are a number of sites in Orange County, particularly in Irvine and Anaheim, which appear to fit that description. Already, nearly 1,000 condos planned for the area around John Wayne Airport and the Platinum Triangle have been switched to apartments, and many more are being considered.
The company could find itself with plenty of competition for these types of projects, with a number of distressed-asset ventures and funds springing up recently. Last month, Newport Beach developer CT Realty Corp. announced a similar plan, in a venture with Macbeth Apartment Systems Inc. of Carlsbad.
Western’s fund already has resulted in one acquisition. It bought a site for development in Woodland Hills, which will hold a 195-apartment, four-story complex.
PM Realty Adds Development
The Irvine office of PM Realty Group, best known for property management and leasing, is adding a development and acquisitions arm to its operations.
The company just hired Chris Stirling as senior vice president of development and acquisitions for its Western division. He’ll be looking at infill projects in Southern California, including office, medical office, mixed-use, industrial and apartments.
Right now, the company is eyeing one project in OC and another in Los Angeles, said James Proehl, executive vice president and managing director for the company’s Western division.
The Houston-based company already has an active development business in the Southwest and is working on about $600 million worth of projects.
“Things are going to turn around in the next two or three years,” when the company’s first local developments likely will start opening, Proehl said.
Stirling most recently was a founding partner of Pasadena-based Stirling Real Estate Group, which worked with institutional investors to buy and develop projects. Prior to that, he worked for IDS Real Estate Group in Los Angeles and Kennedy Associates Real Estate Counsel Inc. in Pasadena.
The company likely will be adding a senior-level construction executive once some projects are finalized, Proehl said.
Avalon Moving Ahead
A pair of companies behind an $850 million redevelopment of a former landfill site in Carson is kicking off work.
Newport Beach-based LNR Property Corp. and Hopkins Real Estate Group of Irvine said they’ve begun remediation efforts and initial development work at Avalon at South Bay, a retail and housing project. Tetra Tech Inc. of Pasadena is handling the environmental cleanup work.
The land, totaling about 168 acres, was bought in two transactions in late 2006 and early 2007. The site previously was considered for a possible football stadium when Los Angeles was courting the NFL.
The two developers plan more than a million square feet of retail space, 1,300 homes and 300 hotel rooms on the land.
Sperry Does Dallas
SVN Equities LLC, the investment offshoot of Irvine-based brokerage Sperry Van Ness, has made its first acquisition in Dallas.
It bought a 12-building office and industrial portfolio totaling nearly 770,000 square feet. The price was $48 million, or about $62 per square foot. SVN Equities now owns about 6.5 million square feet worth more than $500 million, the company said.
Locally based Harkinson Investment Corp. and Dryden Co. sold the Dallas properties but will continue to manage the buildings for SVN Equities.
