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Carmel Partners Buys Former Military Housing for $80M

SAN FRANCISCO-The locally based firm's inaugural investment fund this month closed on three properties located on a former Naval Air Station on the southwest side of Oahu, HI. The purchase takes the 18-month-old fund's portfolio to nearly 4,400 units and leaves it with about $32 million of equity to invest.

By Brian K. Miller | Updated on June 14, 2005

SAN FRANCISCO-Carmel Partners inaugural investment fund this month picked up 530 units in three properties that were part of a former Naval Air Station on the southwest side of Oahu, HI. The purchase price was $79.5 million. The three properties–Orion Housing, Orion Park, and Makai–are known as the Barbers Point Portfolio and are all value-add plays. Carmel says it plans to spend $5 million to $8 million on the property. Carmel Partners chief investment officer Chris Beda tells GlobeSt.com the extra investment will be used to renovate the individual units and the common areas. After that, the units will be rented out to both civilian and military residents at higher rental rates.Like the other properties in the portfolio, Beda says the Barbers Point properties will be held for between five to nine years before being re-traded. The targeted IRR from the investment is in the mid- to high teens, he says.In the past six months, the fund has acquired two other properties: the Lafayette Parc Townhome Apartments in West Covina and the Arbors Apartments in Santa Ana. Lafayette Parc Townhome Apartments, built in 1964, is a 259-unit Los Angeles County apartment complex that caters to families. Carmel plans to spend $4 million upgrading the units. The company acquired Lafayette Parc for $40.45 million. The Arbors Apartments is an Orange County garden-style complex built in 1969. Carmel acquired the Arbors for $18.5 million and plans to renovate the units and common areas.Carmel Partners Investment Fund I LP closed in November 2003 with $215 million of equity. It is now over 85% invested. That leaves about $32 million of equity to spend. Given that its purchases usually include debt equal to 70% of the cost, the fund can acquire approximately $100 million worth of additional assets. Since its inception, Fund I has acquired, or is under contract to acquire over $750 million of assets.

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