NextGen Properties Marks 2 Transactions

February 6, 2023

Two apartment complexes have traded for a combined $87.9 million, with NextGen Properties Group at the center of both transactions.

South Hills Apartments, an 85-unit apartment property in West Covina, sold for $38.3 million, or $450,000 per unit.

“South Hills Apartments is located in one of Greater Los Angeles’ tightest multifamily markets, the San Gabriel Valley, which has had one of the region’s lowest vacancy rates and most limited construction pipelines,” said Kevin Green, executive managing director of Marcus & Millichap’s Institutional Property Advisors division.

Green and Institutional Property Advisors’ Joseph Grabiec and Greg Harris, in conjunction with Marcus & Millichap’s Tyler Leeson, Mathew Kipp and Nick Kazemi, represented seller NextGen Properties Group and procured a 1031-exchange buyer, HFH Ltd.

The sale was a 1031 exchange, which allows the seller to defer capital gains taxes by buying a similar property with the proceeds.

NextGen, with representation from Green, Grabiec and Leeson, rolled the proceeds from the South Hills Apartments sale into the purchase of Alivia Apartments, a 128-unit multifamily property in Whittier, for $49.6 million, or $387,695 per unit.

The acquisition financing was arranged by Marcus & Millichap Capital Corp.

Built in 1966 on 5-plus acres and remodeled in 2019, South Hills Apartments is a gated community with a swimming pool and spa, fitness center and outdoor kitchen with barbecue grills.

South Hills Apartments is just off the San Bernardino Freeway/Interstate 10, near the Eastland Center and Cortez Park. Mt. San Antonio College, Azusa Pacific University and California Polytechnic State University are all within a 10-minute drive, and Metrolink’s Covina and Baldwin Park train stations are nearby.

Green, along with Grabiec and Harris, represented the seller, Fairfield Carmenita LP, and procured buyer NextGen to buy the Alivia Apartments.

Michael Derk, executive managing director at Marcus & Millichap Capital Corp., arranged the financing.

“Completed in 2022, Alivia is one of the only newly constructed apartment buildings in the Gateway Cities region of Los Angeles County,” Green said in a statement. “With just one 60-unit property in the development pipeline, Alivia will be one of the few new rental options.”

“We engaged with 29 lenders to secure the best terms available for the buyer. The 10-year, $19,125,000 nonrecourse loan is fixed at 5.31% and has a step-down prepayment penalty,” said Derk, who had also arranged the financing for the South Hills Apartments sale.

Sitting on over 5 acres, Alivia Apartments has seven residential buildings with 68 one-bedroom/one-bath units that average 742 square feet and 60 two-bedroom/two-bath apartments averaging 1,110 square feet. Community amenities include a resort-style pool and spa, fitness center, social lounge, dog park, and outdoor fire lounge.

There are more than 800,000 jobs within a 10-mile radius of Alivia Apartments, and proximity to interstates 5, 605, 105, and state routes 60 and 91 gives residents access to approximately 1.3 million jobs in the nearby cities of Anaheim, Long Beach, Torrance, El Segundo and Los Angeles, according to Marcus & Millichap data. Three regional Metrolink rail lines and retail and entertainment at the Santa Fe Springs Marketplace, Whittier Marketplace and Uptown Whittier are all nearby.

All of this makes Alivia’s location ideal, according to Grabiec.

“The lack of housing development in Whittier over the past five years has contributed to year-over-year rent growth of 4.63% and 97% average occupancy,” said Grabiec. “Given limited new supply, it is expected that, over the next five years, rent growth will average 3.96% year over year and the submarket will maintain 98% to 99% average occupancy.”

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