LA Developer Seeks More “Value-Add” Investments to Grow Real Estate Portfolio
VENTURA COUNTY, CALIF. – October 2013 – Decron Properties Corp., a diversified real estate investment, development, and management company based in Los Angeles, has acquired the Fountains at Moorpark located at 51 Majestic Court in Moorpark, California, for $84,430,000. The property is a 370-unit garden style, multifamily apartment community covering 16.37 acres of land and comprising of 328,560 rentable square feet. Decron will carryout substantial renovations to the project and transition it from a Class B to Class A asset. The repositioning will include the renovation of all unit interiors and common areas together with the addition of new amenities.
“Moorpark is yet another well located value-add acquisition for our investors,” said David J. Nagel, President and CEO of Decron Properties. “The limited number of quality rental communities with high-end amenities in this submarket will certainly attract apartment renters. With job growth in Ventura County’s biomedical and high tech industries and our planned renovation of the project, we believe our strategy presents an attractive blend of conservative risk with tremendous upside.”
Decron plans a $9.2 million renovation program. When complete, the plan will result in a 30% increase in value. In-place rents average $1,500 per month, a 25% discount to the $2,000 average monthly rent for renovated and newer apartments in the area.
Developed in 1987, the Fountains at Moorpark features two and three bedroom units. Decron intends to provide a superior interior upgrade package including vinyl plank wood flooring, new cabinets, quartz countertops, enhanced lighting, and stainless steel appliances. Select units will offer enhanced private patios of up to 250 square feet. Common area improvements and new amenities will include fire pits and barbeque stations at the property’s four pools, a substantially enlarged tot lot, fitness center, clubhouse, modernized tennis courts, and the addition of a dog park.
The property includes ample covered parking, with carports and shared two-car and private single garages. Decron plans to convert the existing shared garages into private, two-car garages, which does not exist elsewhere in the submarket. Sixty percent of the units will have access to their own private garages.
Recent price increases for single family homes in Ventura County leave many apartment renters priced out of home purchases. Instead, they are looking for high quality and amenitized multifamily rental communities with features exclusively found in a private home, such as private garages. The Fountains at Moorpark is located in an upscale neighborhood with average household income of $105,000 and median home values over $450,000.
As part of its “value-add” strategy, in October 2012, Decron purchased another Venture County multifamily rental community, Creekside Apartments, in Simi Valley, for $70 million. Decron is in the midst of implementing a $12 million renovation program at the 397-unit project, in a similar style to its plans for the Fountains at Moorpark.
During the past year, Decron renovated more than 250 apartment homes in its residential portfolio across greater Los Angeles, as part of its plan to renovate its Class B apartment product into Class A improvements over the next five years. Unit renovations include a standard program with pre-selected finishes and appliance packages, enabling Decron to quickly reposition units and attract higher paying apartment renters. Since implementing its renovation program, Decron has achieved investment returns exceeding 30% on newly rehabilitated units.
“The Moorpark deal met our investment criteria as another opportunity to create value through renovation and asset repositioning. This is our second investment in Ventura County in the last 13 months, with the same exact business plan. We’re bullish on Ventura County, but we’re also very bullish on value-add opportunities in strong job market locations,” added Nagel.
Curtis Palmer and Peter Sherman of CBRE represented the seller. Jack Shanfeld of Acacia Commercial Real Estate represented the buyer.
“The Fountains at Moorpark is an outstanding acquisition by Decron Properties. This community is ideally positioned to take advantage of the growing employment base in Ventura County. The principals of Decron understand the value-add potential of this purchase and I am sure it will be a fantastic addition to their portfolio,” said Palmer.
Wells Fargo financed the acquisition, as well as provided a financing vehicle for the renovation program.
Decron Properties Corp. currently owns and manages 4,800 residential units with another 460 units in development. It also maintains and operates a sizeable portfolio of 3 million square feet of commercial office and retail space located throughout California.
As the real estate investment and development arm of the Nagel Family Trust, Decron has been an active owner and investor in California real estate for over 55 years. With assets in excess of $1.5 billion, the current portfolio includes retail centers, office buildings, multifamily apartment buildings, and marinas. Decron owns and operates over 7 million square feet of commercial and residential real estate in 55 different projects and communities.