LOS ANGELES—Dornin Investment Group has disposed of two multifamily properties and one performing note, GlobeSt.com reports exclusively. The investor is executing a business plan to sell multifamily properties at the current peak market conditions and purchase value-add office properties. It earned $33.5 million from the three sales, which were sold individually to three different private investors.
“On the apartment side, we are at relative peak or close to a peak in terms for the cycle, and we feel like there is more opportunity and upside in the office market. We were able to develop a meaningful return for our investors,” Chris Dornin, president and founder of Dornin Investment Group, tells GlobeSt.com. “Generally speaking, we have been selling our multifamily properties and exchanging them into value-add office properties in Texas and West,” This continues the strategy that we started two years ago. We have seen such significant demand for multifamily at prices that were very attractive to us, and so it made sense to exit.”
The two multifamily properties include the Seabreeze Apartments in Santa Barbara and the Kelsey Residences in Los Angeles. Dornin purchased the 64-unit Seabreeze Apartments as a core-plus investment. “This was a brand new apartment complex with a history of high occupancy,” adds Dornin. “The acquisition was a core-plus investment, and it was really just a cash flow play.” A private investor purchased the property for $10.5 million. Steve Brown, Austin Herlihy and Chris Parker of Radius Group Commercial Real Estate represented Dornin in the transaction.
Alternatively, Dornin purchased the 41-unit Kelsey Residences as a value-add play. The property was originally developed as condos, but came to market during the downturn, when the condo market was not doing well. Vacant at the time of purchase, Dornin was able to lease up the property in three-months and establish a healthy cash flow. “We had completed our business plan early on, and we benefitted from some additional rent increases,” he says. “It just made sense for us to exit. With the significant demand for multifamily assets nationwide, and in particular in Los Angeles, and the cap rate compression that was occurring, we looked at the market and decided this was a good time.” A private investor purchased this asset for $13.1 million. Brent Sprenkle with Berkadia Real Estate Advisors represented Dornin in the transaction.
The performing note is a $10.5 million first trust deed on a 152-unit apartment complex. Purchased in 2013, the performing note was pending default. “The underlying occupancy was suffering and there was significant deferred maintenance,” says Dornin. “However, the owner was able to correct those issues the last couple of years, so the underlying asset value was able to recover. We bought the note at a discount, so we experienced some pretty good yield and then were able to sell it at the full balance of the note to a private investor.” Dornin purchased the note at a significant discount, and was able to sell it for the full balance of the loan.
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Kelsi Maree Borland
