Henry Manoucheri

The Hollywood Park stadium and mixed-use development in Inglewood has bought attention to Inglewood—and has helped to drive apartment investment—but the development is only one of many compelling reasons to invest in the market. The fundamentals in the market have been improving for years. Universe Holdings has been on a buying spree in the market. With the recent acquisition of the 15-unit Chateau Park Casino Royale V, the firm now has nine properties in the market.

“We were bullish on the market well before the stadium was announced as we identified Inglewood as a very solid rental market with strong multifamily fundamentals more than four years ago when we made our first investment there,” Henry Manoucheri, CEO of Universe Holdings, tells GlobeSt.com. “Back then, we saw a vibrant community of working class people that is geographically 15 minutes from the heart of L.A., 10 minutes to LAX and five miles to the beach. We also saw the natural migration of renters moving southeast as they were getting priced out of neighboring markets on the Westside—and Inglewood was in the center of that path.”

While there are many compelling reasons to invest in Inglewood, the stadium project is certainly among them, and it has augmented the market dynamics.

“Now we're benefiting from the new stadium,” says Manoucheri. “When you look around the world, where there is a new stadium or large development, the impact is tremendous once it has been completed.”

However, with the stadium development has come more competitive investment capital in the market, in turn inflating pricing and compressing cap rates. Manoucheri says that pricing has increased 150% and cap rates have compressed to 2.5% to 3.5%. “This has not been lost on other investors as the space now has become more crowded. Bottom line the fundamentals remain very, very good, especially as the market continues to gentrify, and rents continue to climb,” adds Manoucheri. “The only problem has been scaling up to find larger deals, but we are still fine looking at opportunities on the smaller side, where there is less competition, but tremendous value.”

In general, Universe Holdings targets underserved markets, and in the last four years, it has maintained a consistent strategy in Inglewood, aiming to buy properties that benefit from long-term ownership. “Remaining true to that strategy, we have been very successful in building a significant and successful multifamily portfolio here in Southern California,” says Manoucheri. “This most recent acquisition is an example of that where we were able to buy at less than $300,000 per unit. This is in sharp contrast to what we would have to pay in other parts of Los Angeles, where prices would be twice that for a comparable property. We were able to buy this property at a 20 gross rent multiple, which can be improved to 9 GRM or better through renovation and proper management.”

In the four years, it has been more difficult to find properties that fit this criteria, bot because of an increase in investment and because of the evolution in the market. “A lot of people who would not otherwise have lived there are moving to Inglewood,” says Manoucheri. “As we envisioned four years ago, we are seeing a migration of people from the tech industry who are working and living Marina del Rey, Playa del Rey, and other parts of the Westside as they see something big is coming in the form of the new stadium. We are also seeing existing owners beginning to renovate their properties. Consequently, there are 10 times more buyers in the market then there were four or five years ago, when we entered the market.”

While the growth in the market and increase in competition has made investment more challenging, it isn't impossible, and Universe Holdings continues to look for deals. “It makes it difficult, but not impossible to find good opportunities, and this most recent transaction is an example of the great job our acquisition team does to uncover them,” says Manoucheri.