Associated has net-leased the office and retail building for $1.44 million per year with additional increases each year to its major tenant, Ace Gallery, which occupies most of the space in the building, Friedman continues. “We have given him an option to purchase the building for $20 million any time in the first five years. This would make the cost per unit a little bit less than $100,000, which is a very attractive purchase price.”

Friedman adds that the company paid all cash for the property and plans to fund the construction the same way, using cash on hand and its line of credit. Construction is slated to start in Spring 2013, with first occupancy expected for first-quarter 2014. “We consider this a core investment,” he adds. “This is something we will add to our portfolio and expect to own for quite some time.”

Associated, which is based in Richmond Heights, OH, has been scouting the Southern California market for some time, focusing on the region from San Diego to north of Los Angeles and west of the I-15 Freeway to find appropriate properties for its re-entry into this market. Friedman tells GlobeSt.com that the firm has had its “boots on the ground” in Southern California for some time, since regional VP Greg Anderson is based in Orange County. Aside from property management in the early 2000s, the Miracle Mile purchase marks the company’s first foray into this market since it sold property here in 1999.

Of the other properties Associated owns, roughly 46% are located in the Midwest, 20% are in the Mid-Atlantic and the rest are in Atlanta, South Florida, Texas and now California. “We are the only publicly traded apartment REIT with a significant presence in the Midwest,” Friedman tells GlobeSt.com. He adds that the company is considering other similarly attractive opportunities, many of which are off-market, and that the firm recently acquired a post office site on Bethesda Row in Bethesda, MD, where it will also be developing roughly 140 upscale apartments.

Also, as GlobeSt.com previously reported, in July 2011, the company was planning to construct a rental apartment complex in Far North Dallas, having already purchased a 222-unit complex on Noel Road. And in June 2011 the firm purchased Gables Wellington, a rental community consisting of 222 units in Wellington, FL, for an undisclosed amount from JP Morgan and Gables Residential. The three-story rental community comprised 14 buildings totaling 256,472 square feet.