L.A. Apartment Property Paragon Trades for $58.6M
- Jul 14, 2011
July 14, 2011
By Barbra Murray, Contributing Editor
In Monrovia, Calif., Paragon at Old Town, a 163-unit luxury apartment property that welcomed its first tenants just one year ago, has come under new ownership, courtesy of a transaction arranged by Institutional Property Advisors. Cornerstone Real Estate Advisors L.L.C. acquired the mixed-use suburban Los Angeles asset from Urban Housing Group for $58.6 million.
Located approximately 20 miles east of Los Angeles at 700 S. Myrtle St. in the center of San Gabriel Valley, Paragon occupies three acres surrounded by Old Town Monrovia’s high-end boutique and restaurant offerings. Designed by KTGY Group Inc. Architecture and Planning, the building has its own retail offerings in 6,000 square feet of commercial space. Commercial real estate services firm NAI Commercial handles leasing for the nearly fully occupied street-level segment.
Urban Housing turned a profit on the deal and handed over the property to Cornerstone with nary a space left on the residential tenant roster. Given the substantial demand for luxury-apartment accommodations in the area, the process of achieving full occupancy was short, taking somewhere in the neighborhood of just six months to complete. “The city of Monrovia did an excellent job of establishing a technology corridor on Huntington Drive, and that brought a lot of high paying tech-oriented jobs,” Greg Harris, executive vice president with IPA, which represented both the owner and the seller of Paragon, told Commercial Property Executive. “That was the backdrop to why Urban Housing built the project. There was a lack of housing for people who work there.”
The property reached stabilization in the fourth quarter of 2010, even without proffering the discounts that many apartment communities were then using to attract tenants. “The location was strong enough and the quality was strong enough to achieve rents in line with downtown Pasadena,” Harris said. Monrovia is emerging as the newest version of neighboring Pasadena, a suburban Los Angeles town with big-city amenities in a walkable, trendy urban village environment.
Paragon definitely got investors’ attention. Ultimately, IPA received roughly a dozen offers from a diverse group of potential buyers, including institutional advisors, pension funds and REITs. “There’s a tremendous demand in the institutional investment community for core assets, including newly constructed, high-quality, well-located assets,” Harris said. “This property is a testament to how strong that demand is.”
More apartment assets in San Gabriel Valley are likely to make it onto investors’ radar, considering the area’s strong market conditions. Signs of improvement began to emerge in 2010, and by year’s end, the average vacancy rate was a more-than-respectable 95 percent, as per a USC Lusk Center/Casden Real Estate Economics report. This year is proving to be even more successful, due not only to an increasing need among renters, but also because, according to the report, no new units are anticipated to reach completion in San Gabriel Valley in 2011.
*This story was updated on July 15, 2011 at 4:24 p.m. EST.