Gemdale Properties and Investment Purchases First Value-Add Residential Project, South Hills Community, Located in West Covina, CA
Los Angeles, CA (October 20, 2016)
Gemdale Properties and Investment (“GPI”, 535.HK), an affiliate of Gemdale Corporation (600383.SH) which is one of China’s largest and leading real estate developers, announced its $26.3 million acquisition of an 85-unit apartment community located in West Covina, California. The community is being acquired at a significant discount to replacement cost and represents GPI’s first value-add acquisition, with planned renovations to both the exterior and interior of the community in achieving rent levels more in line with comparable communities in the immediate submarket. The project is located at 2900 East Virginia Avenue, West Covina in the greater Los Angeles metropolitan area. Income levels in West Covina are approximately 20% higher than that of the broader LA County and the property is conveniently located nearby key transportation arteries, including the I-10 Freeway, the I-605 Freeway, the I-210 Freeway, and the CA-60 Freeway.
According to Jason Zhu, Chairman of Gemdale USA, “We are delighted with the evolution of our strategy at Gemdale USA to now include our first value add opportunity, in this well located South Hills Community, offering considerable upside opportunity for growth in rents and Net Operating Income via exterior and interior upgrades.” Mr. Zhu added, “Planned improvements and renovations we intend to make will primarily focus on such areas as the community’s swimming pool, driveways, roofing, landscaping, as well as the addition of a family-friendly courtyard with playground areas. These improvements are scheduled to be completed within twenty-four months starting with many exterior upgrades, while interior upgrades will be phased in as leases expire.“
Michael Krupa, President of Gemdale USA added, “This community is conveniently located within walking distance from numerous retail establishments and restaurants, including a grocery store as well as a major fitness center in the immediate neighborhood. The community is also located a short drive from a Metrolink Station, facilitating convenient public transportation. The neighborhood is known for its schools, which are designated as California Distinguished Schools with their high API scores, its nearby country club and its equestrian center, all within minutes of the community.”
Attractive long-term fixed-rate debt for this transaction was provided by Prudential Mortgage Capital, which served as Fannie Mae's Delegated Underwriting and Servicing ("DUS") lender on the acquisition's debt financing.