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Buyer Drops In On Apartments After Price Tumble

Los Angeles Business Journal  |  Feb 11, 2012

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Monday, February 20, 2012

A 264-unit multifamily complex in Valencia traded hands for $56.7 million this month.

Decron Properties Corp., an arm of real estate investment group Nagel Family Trust, bought the property known as the Madison at Town Center from Prado Town Center West LLC, a joint venture of Miami’s Lennar Homes Inc. and L.A.’s Regent Properties Inc., according to CoStar Group Inc.

It was a significant discount from the $91.5 million price Prado paid for the property in 2005.

The Madison was built in 2004 as a 341-unit apartment complex but was converted to condos the next year. Only 77 units sold by 2007 so Prado reconverted the others back to apartments.

Today, the 411,000-square-foot property, at 24505-24595 Town Center Drive, is fully leased. Units range from one to three bedrooms, with monthly rents of about $1,400 to $2,400.

David Nagel, Decron president, said that the condo-apartment mixture is typically unattractive to multifamily buyers since they can be difficult to manage. But the steeply discounted price and the high-quality building gave his company the confidence to take the risk.

“From our perspective, it works in our favor because it allowed us to purchase the units at a bargain and so far below replacement cost that when the market turns, it won’t take long for the units to appreciate to a level where we can make a profit,” Nagel said.

Decron plans eventually to convert the rest of the units to condos and sell them individually when the market improves.

The acquisition is the latest in a buying streak for Decron, which has purchased 1,500 units in the last 18 months. The company manages or owns 4,300 units and has a portfolio of an additional 3.5 million square feet of commercial space in California.

Laurie Lustig-Bower from CBRE Group Inc. represented the seller. Decron represented itself .