Tag Archives: BH Properties

Fiesta Park

The value-add play in Phoenix’s multifamily market

By:  Steve Jaffe, Executive Vice President and General Counsel, BH Properties

 

Steve Jaffe is the executive vice president and general counsel for BH Properties, a Los Angeles-based commercial real estate investment company that acquires and maximizes the value of under-performing properties located throughout the country. The firm also has regional offices in Dallas, Texas and Salt Lake City, Utah.

Steve Jaffe is the executive vice president and general counsel for BH Properties, a Los Angeles-based commercial real estate investment company that acquires and maximizes the value of under-performing properties located throughout the country. The firm also has regional offices in Dallas, Texas and Salt Lake City, Utah.

During the most recent Great Recession, Phoenix saw property values drastically decrease and apartment owners lose tenants due to lost jobs. The domino effect resulted in owners dropping rents to maintain occupancy, which, in turn, caused them to lose out on money they would have spent to reinvest in and improve their properties, leading to further tenant loses. For many of the multifamily properties in the B- to C classes, this downward cycle was fatal.

In 2010, BH Properties stepped back into the apartment business with Arizona as its target market. The Los Angeles-based company brought its proven strategy of purchasing undermanaged or distressed assets at the appropriate price and turning the properties around in one of the markets that had been hit the hardest by the recession.

Fiesta Park in Mesa, Arizona was one such multifamily property suffering from long-term neglect and in need of BH Properties’ value-add approach. Recognizing its upside potential and believing the Phoenix market was (or would soon be) on the upswing, BH Properties purchased the complex in a short sale, making it the first purchase made by BH Properties after the market crashed almost three years earlier.

After purchasing the complex, BH Properties identified areas that needed to be restored and repaired in order for the asset to function properly and to draw new tenants. The 320-unit complex was 54 percent occupied at the time BH Properties went under contract to purchase the property and required extensive renovations to both the exteriors and interiors. Expenses were then prioritized in order to keep rents within reason to fit within the constraints of the C class property.  

To add value without losing sight of investment goals, the firm focused the majority of the renovations on improving common areas and individual units. The exterior of each building within the complex was painted with a fresh color scheme, the fence around the swimming pool was repaired and new furnishings were added, and outdoor lighting was installed throughout the complex illuminating areas that may not have seemed safe before. An archway was also built in front of the leasing office to increase its visibility and provide a welcoming entrance to the complex. The leasing office interior was updated and made more inviting. Individual apartment units were refurbished with better flooring, upgraded light fixtures and resurfaced countertops. For safety, walkways and staircases were improved.

With more than $1 million in renovations completed over an eight-month-time-period, BH Properties turned the neglected complex into a clean, safe, family-oriented living space. Shortly after the final touches were made to enhance the curb appeal, the complex saw occupancy grow to 90 percent from 54 percent at the time of purchase. Gradually, BH Properties was able to increase rents and improve the overall tenant profile.

The keys to success with value-add plays are patience and a true understanding of the market and not “over improving” an asset. Phoenix, like other major cities in the Sunbelt, held all the fundamentals for a great economy and continues to strengthen along with the recovery. In addition to the area’s unemployment rate coming in at almost one percent lower than the national average, recent reports  indicate a slight uptick in the median asking price per unit in the Phoenix market with an increase of 10.7 percent compared to last year’s prices.

BH Properties recognized the potential this business and family friendly environment had for a strong recovery across all sectors, especially the housing market, and employed its quick closing business model to take advantage of the primed opportunity. Purchasing Fiesta Park at the right price allowed the firm time and capital to make the necessary repairs in order to bring the complex back up to par, while the market gradually made a comeback.

 

 

BH Properties, WEB

BH Properties acquires Shasta Beverages warehouse in Phoenix

BH Properties, a Los Angeles-based firm that specializes in acquiring and repositioning challenged or distressed real estate properties, has purchased the Shasta Beverages, Inc. warehouse facility, located at 301 S. 29th St. in Phoenix, for $1.9 million. The all-cash deal closed in 18 days.

“This property presented a prime investment opportunity as we are actively pursuing properties in Arizona to grow our industrial portfolio,” said Steve Jaffe, executive vice president and general counsel for BH Properties. “Located in a high-traffic location, the warehouse is ideal for any number of businesses looking to expand in the Phoenix area and can accommodate a variety of uses. The purchase also highlights our ability to identify an asset, review all aspects and close rapidly which, in this case, was of concern to the seller.”

Centrally located near the Phoenix Sky Harbor International Airport, the 62,776-square-foot, two-story warehouse features three car spots for rail service and seven grade level truck doors with triple wide truckwell and dock levelers.

The demand for warehouse facilities continues to increase in order to meet the needs of not only online retailers, but also call centers and non-traditional tenants, looking for space near high-traffic transportation hubs. Reports indicate that vacancy rates have decreased in the second-quarter, due to a surge in net absorption across the Greater Phoenix area.

Kirk Jensen, executive vice president for DAUM Commercial Real Estate Services, represented BH Properties and Shasta Beverages in the transaction.

Gilbert Town Square

BH Properties Ends 2013 With Record Year Over 2012

BH Properties, LLC is reporting a banner year for the company with  $100M in transaction volume and $82M in acquisitions, a 57 percent increase over the previous year’s results.
“BH Properties had a very successful year in the purchase and sale of its properties across the nation,” said Steve Jaffe, executive vice president and general counsel of the company. “We are particularly excited about our Southwest ventures and what that will mean to our investment strategy in 2014.”
The company acquired properties in all of its major disciplines – multifamily, retail, office and industrial, and will continue to keep its “value-added” focus in its core markets like Arizona and California.  This past year also saw the firm move back into the Denver and Texas markets in acquisitions, closing two purchases, with additional purchases expected in 2014.
Some of 2013’s acquisition and disposition highlights include:

  • Gilbert Town Square: The $13.4 million late December purchase of the 159,000-square-foot Class A retail shopping center is situated within the highly affluent Phoenix submarket of Gilbert, Ariz.  Constructed in several stages from 2001-2004, the eight building asset has tasteful architectural nuances and strong curb appeal, indicative of the historical accents of the region.  Gilbert Town Square is anchored by Regal Theaters and is shadow anchored by Brunswick Bowling Lanes. The center’s prominent exposure along Gilbert Road has historically been a key to attracting national tenants such as Chipotle, Sport Clips and Pei Wei.
  • Richmond Office Property:  The $7 million sale, which was the first sale of the company’s assets in Virginia as a part of a more westward focus, involved an 181,000- square-foot office building sold to Shamin Hotels, which plans to reposition the asset as a flagged hotel.
  • Lake View Center:  The 106,345-square-foot Class A office property, consisting of two office buildings located in Ontario, Calif., was acquired for $13.8 million.
  • Terrace Park Apartments:  A 214-unit multifamily property, located in Phoenix, was acquired for $6.2 million.
  • Madera Court Apartments: The $9.6 million purchase, which was part of a portfolio sale, involved 286 units in Phoenix. This purchase marked BH Properties’ ninth multifamily property in Arizona in 24 months.
rsz_vista_ventana-1

BH Properties Acquires Vista Ventana For $10.2M

 

BH Properties, a Los Angeles-based commercial real estate investment firm that has a penchant for working through difficult transactions, time-sensitive closing factors and an expertise in repositioning real estate, acquired Vista Ventana, a 275-unit multi-family property at 3221 W. El Camino Dr. in Phoenix.

“With two of our other Phoenix properties, Smoke Tree and Biltmore, nearby, we plan to manage Vista Ventana to take advantage of the economies of scale that we can achieve by cross-marketing, sharing staff and promoting properties to new visitors,” said Executive Vice President of BH Properties Steve Jaffe.

“This acquisition perfectly fits into what BH Properties is looking to accomplish in the Southwest. We expect to add two more apartment complexes by the end of 2013.”

According to Jaffe, the seller had made a significant amount of improvements including interior upgrades, exterior painting and a roof renovation while also increasing occupancy to 90% prior to closing.

“This stable asset mirrors most of our Phoenix multi-family assets and should not require much in the way of improvements,” he said.

Since January, BH Properties has been extremely active in the Southwest, including the recent acquisitions of the 205 condominium units at Avalon Hills and the 214-unit Terrance Park Apartments both in Phoenix.

“This well maintained asset is a solid, long term type hold for us. We continue to view the Arizona B and C class apartments market as full of opportunity — despite the recent uptick in pricing. We hope our high level of activity will keep us at the top of all sellers’ lists,” Jaffe said.

BH Properties was represented by Karl Abert and Brad Pickering of Newmark Grubb Knight Frank, who also represented the seller, El Camino Vista, LLC.