Apartment Complexes Finding Buyer, Investor Interest

It’s been a busy month for sales of some of Orange County’s larger apartment complexes.

In May, I wrote about a trio of local apartment sales—two properties in Aliso Viejo and another in Rancho Santa Margarita—by Milwaukee’s Northwestern Mutual Life Insurance Co. In total the apartments changed hands for close to $200 million.

You can add another sizable complex to the list: Santa Ana’s Adagio at South Coast, a 349-unit complex near the intersection of MacArthur Boulevard and Main Street. The complex sold this month for $43.1 million, or about $123,496 per apartment.

The Prime Group, a big San Francisco-based investor that counts two other Santa Ana complexes to its name, bought the property.

The seller—said to be an institutional investor—wasn’t disclosed. The Business Journal’s data shows the complex last traded hands in 2000 at slightly less than the current selling price: $42.3 million.

Adagio at South Coast was built in 1974 and was renovated in 2000. Monthly rents at the complex start at about $1,200.

The uptick in recent sales activity is due to buyers and sellers starting to have a meeting of the minds on where prices should be, said Ray Eldridge, a broker with the Newport Beach office of CB Richard Ellis Group Inc. That hadn’t necessarily been the case in recent years, he said.

Eldridge and CB Richard Ellis’ Michelle Jefcoat represented the seller in the deal. They, along
with Hendricks & Partners Inc., also worked on the trio of local sales last month by Northwestern.

Those three complexes were bought by Newport Beach-based Stoneridge Capital Partners, Newport Beach-based Pacific Coast Management and Se-quoia Equities Inc. of Walnut Creek.

The Prime Group also took part in Northwestern’s recent decision to sell off a large portion of its apartment portfolio, although not in OC. Last month, the company bought two Oceanside apartment properties, totaling 658 units, from Northwestern for $84 million.

The buyer was motivated to get the Adagio deal done, according to Eldridge—it closed in less than a month.

Laing’s Chapter Change

The remaining land and home assets of bankrupt Irvine-based builder John Laing Homes still are likely to be sold soon, but not in the manner its parent company, Dubai-based Emaar Properties PJSC, would prefer.

A Delaware bankruptcy court recently sided with the unsecured creditors of John Laing to turn the company’ bankruptcy proceeding from Chapter 11 to Chapter 7—signaling a probable liquidation of the builder’s assets.

I wrote in late May how Emaar’s and John Laing’s executives were pushing for the court to approve a sale process that could allow a unit of Emaar to buy back the remaining non- joint venture assets of the company on the cheap—likely for less than $20 million.

Unsecured creditors opposed the plan because it was likely they wouldn’t get paid as much and Delaware bankruptcy Judge Brendan Shannon agreed with their objections, ordering the case to be converted to Chapter 7.

The decision isn’t final. The judge held up implementation of the order in the hope the company and creditors would work out differences, which was still ongoing as of last week.

Either way, “we are looking at something that is functionally the same whether it is under Chapter 7 or under Chapter 11—we’re looking at a sale” Shannon said, according to Dow Jones’ Daily Bankruptcy Review.

John Laing also still has a number of individually financed land assets, which are set to be sold separately from those currently being disposed of in bankruptcy court, sources said.

COMMERCIAL

In the June 1 issue of the Business Journal, I wrote about how law firm Brady, Vorwerck, Ryder & Caspino will be moving into a new office at the Orange’s City Plaza office tower later this summer, after signing a 10-year lease.

The story mentions that Brady, Vorwerck will be getting its name on the building—but it’s not top signage for the 18-story tower. Rather, the company’s name will be placed on a less prominent location on the building, officials recently clarified.

The property’s owner, Los Angeles’ Hudson Capital LLC, said it’s still looking to land another big tenant that will get top signage.