From high vacancy, low NOI, and minimal distributions to owners. To property boasting 100% occupancy, improving rental income by 47% and increased distributions to ownership by 47%.
The apartment community located in the South Bay presented an attractive opportunity in the city of Redondo Beach. The property is in a highly desirable neighborhood with a great school district, proximity to the beach, high-income employment centers, many shopping centers, and great weather year-round. All these factors combine to give multi-family housing in this area essential value beyond most other neighborhoods.
This property had been neglected by the previous manager with high vacancy, low NOI, and minimal distributions to owners. Many of the units still had the original 1960’s interiors, with dilapidated cabinets, windows, and plumbing all contributing to high operating expenses. Ownership worried about the asset’s low performance under the current manager thereby contacted Milan Capital to assist them with the improvement of their asset. Milan Capital proceeded with a comprehensive pre-engagement process by secret shopping the project, conducting a market comparison, reviewing the projects lease guidelines and lease document, peer reviewing vendor contracts, thoroughly inspecting the property, conducting a unit turn analysis, reviewing Landlord’s financial controls, providing a sample financial report, and discussing debt options. It became clear to all parties that the property needed a new strategic direction. In 2013 Milan became the property manager and set to work implementing an improvement program starting by hiring a new onsite manager.
The asset was rebranded to fit the community highlighted by the beautiful mural on the front elevation that has now become a landmark, a website was created to market the property and for use by the residents, new signage was added, the unit interiors were completely remodeled and upgraded with modern finishes and fixtures, all buildings were repainted, new dual pane windows were installed, the water supply lines were upgraded to copper piping, the pool deck was resurfaced, the parking lots were resurfaced and resealed, community barbecues were added, roofs are now watertight, and beautiful new landscaping was designed and installed.
By end of the second quarter of 2016, 36 months after Milan's involvement, the property boasted 100% occupancy, improving rental income by 47% with rents 13.5% higher than initially forecasted and increased distributions to ownership by 47%.