Selected Case Studies

ASANA AT NORTH PARK

San Diego, CA

Status: Realized

Acquisition Date: 09/2014

Disposition Date: 12/2017

Purchase Price: $18,500,000

Total Capitalization: $21,400,000

NSE Value-Add

Exterior BEFORE

Exterior AFTER

Exterior BEFORE

Exterior AFTER

Investment Description & Strengths

  • 132-unit property located in the North Park submarket of San Diego, CA, a gentrified neighborhood with diversified tenancy
  • Purchase price of $18.5m represented a cap rate of 5.34% based on in-place income
  • Distressed seller originally acquired the property in 2007 and ceased its renovation program during the financial crisis
  • Property was neglected and in need of significant capital improvements in order to compete in the gentrifying submarket and attract a more discerning renter

Execution Highlights

  • Property was re-branded from Solana Vista to Asana at North Park to create a new ambience and message campaign
  • Exterior renovations included highly visible contemporary paint scheme and two large graffiti-style murals painted by an up-and-coming Los Angeles artist; front entry was updated to create a better sense of arrival
  • Interior and amenities renovations targeted a “modern beach” motif and included stainless steel appliances, tile backsplashes, quartz countertops, improved laundry facilities, and the addition of a fitness center and swimming pool
  • Renovations completed in less than 3 years, occupancy stabilized at 97%, average rental premium of over $350 on renovated units (an average 28.9% increase over previous rent and a return on cost of 83%)

CROSSINGS AT THE BAY

Long Beach, CA

Status: Realized

Acquisition Date: 11/2011

Disposition Date: 10/2015

Purchase Price: $34,500,000

Total Capitalization: $41,000,000

NSE Value-Add

Pool BEFORE

Pool AFTER

Exterior BEFORE

Exterior AFTER 

Investment Description & Strengths

  • 237-unit property located in Long Beach, CA in a great submarket near a major university with strong student-oriented demographic
  • Transaction was sourced through a broker relationship and awarded after the prior buyer was unable to close
  • Property suffered from significant deferred maintenance, was in need of modernization and increased functionality, and faced entitlement discrepancy on existing units

Execution Highlights

  • NSE successfully re-affirmed entitlements for 235 units and legalized 7 units
  • Completed $5.3 million of capital improvements on time and on budget including façade treatments and common area renovations
  • A combination of EFIS detailing, paint, new stucco and windows on exterior elevations were used to accentuate the new leasing pavilion and fitness center; a “modern beach” ambience was also created for the swimming pool and barbecue areas
  • Provided senior leadership and strong customer service throughout the renovation process: resident hotline, live-in superintendent, weekly conference calls and monthly in person meetings contributed to maintaining healthy occupancy

RANCHO AZUL

San Diego, CA

Status: Realized

Acquisition Date: 08/2015

Disposition Date: 02/2018

Purchase Price: $14,000,000

Total Capitalization: $15,287,896

NSE Value-Add

Fountain BEFORE

Fountain AFTER

Kitchen BEFORE

Kitchen AFTER

Investment Description & Strengths

  • 74-unit, two-story, 1976 vintage, garden-style property located in the Spring Valley submarket of San Diego, CA within 20 minutes of downtown
  • Purchase price of $14 million (or $189,189/unit) represented an attractive cost basis, cap rate of 5.03% based on in-place income
  • Property was sourced through a direct, long-term relationship with the seller
  • Favorable unit mix combined with improved unit interiors and additional amenities would lead to an increase in rental income

Execution Highlights

  • “El Paseo Apartment Homes” was rebranded to “Rancho Azul” and the the addition of spanish tile, wrought iron accents, assorted architectural EFIS details, and new landscaping gave the property a more hacienda-style feel
  • Common areas were further improved by new monument signage and entryway improvements
  • NSE successfully renovated 2 bedroom/1.5 bathroom units into more functional and valuable 2 bedroom/2 bathroom units by removing bathroom cabinetry, sealing a pocket door, moving the toilet, and adding a walk-in shower
  • Washer/dryer units were added to all 3-bedroom floor plans
  • Rental income improved by 25% in 2.5 years of ownership and NSE achieved the financial objectives of its original 5-year investment plan