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Case Study

Tustin Cottages

Situation
Jones Lang LaSalle was engaged by Nevis Homes to sell its 93-unit apartment property, Tustin Cottages. 
 
The property was constructed as condominiums in three phases from 2009-2011.  The property was unique in that it was wholly comprised of three and four bedroom townhomes complete with direct access two car garages.  With an average unit size of 1,647 SF, the apartments were some of the largest units in the market.  The challenge for our team was that
because the property’s extra-large units commanded such top of the market luxury rents, investors were hesitant to acquire the record high $400,000 per door sales price the JLL Multifamily Team was seeking.
 
Strategies
  • Executed a National marketing campaign to expose the offering to both Orange County based investors and all US investors seeking to acquire Class A, Southern California apartment product.  On a micro-level, our marketing featured a detailed investor tour that highlighted the unique nature of the apartment residences, and the future job growth potential from the nearby employment centers of The Irvine Business Complex and the Irvine Spectrum.
  • Demonstrated an existing cash flow financial model as an apartment investment (4.5% yield) and demonstrated a highly profitable future potential condominium exit strategy (based on a 2007 peak-to-trough condo pricing analysis), thereby justifying the record price of over $400,000 per unit. Our condominium sale analysis demonstrated potential retail condo sales in excess of $600,000 per unit. 
Achievements
  • We sourced a Northern California 1031 exchange buyer with a need to close by year-end.  Both Buyer and Seller were motivated to consummate the transaction and worked with one another to overcome minor due diligence challenges including a new property manager, the construction of an additional twenty five parking spaces and stabilization of the occupancy.
  • Sold for $37.9M, thereby achieving the highest sales price per unit in Orange County history of $408,000/unit.

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