Charles Dunn Company has been awarded a nearly 526,000 square foot property management assignment from Watt Properties, a division of Santa Monica, Calif.-based Watt Companies. The seven-property portfolio consists entirely of retail centers – six of them located in Los Angeles County and one in Ventura County.

“We are honored to add Watt, a major regional commercial real estate owner, to our diverse roster of property management clients,” said Patrick Conn, president of Charles Dunn Company’s Management Services division. “Our ability to proactively provide an entrepreneurial, hands-on approach combined with our depth of management resources, were both key factors in winning this substantial new business.”

The properties Charles Dunn will be managing range in size from nearly 11,000 square feet to more than 132,000 square feet. Romy Miura, senior portfolio manager with Charles Dunn, will oversee management on all seven locations with James Byun serving as assistant property manager.

“This is the first time Watt has gone outside of its own firm for property management services,” said Wendy Campbell, vice president, property management, Watt Commercial Properties. “We selected Charles Dunn Company based on the firm’s consistently strong level of customer service and depth of expertise in successfully managing retail properties. Additionally, we were seeking a firm that was a match with our corporate culture and values that would be a natural extension of our company. Charles Dunn fit that requirement as well.”

Albert Shilton and Blake Rogers of Charles Dunn Company represented the seller, a San Diego-based private investor. The buyer, Los Angeles-based Brea Exchange, Inc. was represented by Teles Properties. The property sold at a cap rate of 4.6 percent.

Built in 1947, the property totals 9,918 square feet and was 88 percent occupied at the close of escrow. The building includes private garages, a courtyard setting and onsite laundry facilities. The property includes four one-bedroom/one-bathroom units, two, two-bedroom/one-bathroom units, and two, three-bedroom/two-bathroom units.

“The buyer recognized the upside potential of the investment based on the fact that current rents were approximately 20 percent below market,” said Shilton.

Charles Dunn Company generated multiple offers. The final sale price was the second highest price per square foot paid in Santa Monica for a rent controlled asset in 2012, indicating continued strength of the multifamily sector, and the formidable appetite for well located multifamily properties.

Hamid Soroudi of Charles Dunn Company represented the seller, a Los Angeles-based private investor. The buyer, Los Angeles-based KLB Holding Company was represented by Rachel Neuwirth of Nelson Shelton & Associates. The property sold at a cap rate of 4.4 percent.

Built in 1963, the property totals 10,830 square feet and was 100 percent occupied at the close of escrow. The building includes controlled access and an elevator. The units include air conditioning, fireplaces and dishwashers. The property also features a 3,300 square foot 3-bedroom/3.5-bathroom penthouse with three fireplaces, large den, balcony, family room and dining room. The other six units include two, 2-bedroom/1-bathroom units, and four 2-bedroom/2-bathroom units ranging from 800 square feet to 1,200 square feet.

Soroudi leads Charles Dunn Company’s The Soroudi Group. The Soroudi Group is the most successful and active group of brokers involved in selling and exchanging of prime Westside properties. Their marketing program delivers sold properties at more than 98.5 percent of the list prices within a compressed marketing period.

Four of the industry’s best property management companies provide their top five tips to achieve success in the retail, office, industrial and multifamily markets.

Compiled by Nellie Day

INDUSTRIAL
By Eileen Conn

#1: Keeping Up Appearances
Getting the best tenants and commanding the highest rent is a primary goal of property management. It starts with a sharp-looking building that has strong curb appeal. It is very important to keep the structure, landscaping, common areas and overall appearance in good, clean condition. You only get one chance to make a first impression with potential tenants.

#2: Handling Vacancy–Pro-Forma Goals
Owners should create pro-forma goals for tenancy requirements and aggressively market space to logical tenants that meet those goals. Potential tenancy drawbacks, as well as advantages, should be considered when marketing the property. For example, large, single-tenant situations are on the surface favorable, however, there is also financial risk associated for an owner should a tenant unexpectedly vacate due to bankruptcy or going out of business. Can the owner take that risk? External economic forces have a gigantic impact on industrial property, more so than retail or office space. Aggressive marketing and leasing of vacant or soon-to-be vacant space to the right tenants play a vital role in the management process.

#3: Go Green Or Greener
Being green is always a consideration when it comes to managing industrial property. Even modest changes to greener practices can save facility costs and be eco-friendly. We recommend starting out with an energy audit or benchmarking program. Looking into a cool roof system, switching to energy-efficient lighting, taking advantage of other energy saving incentives, and leveraging technology to support green products or processes are all ways to go green and save. It also helps to work with the tenants to incentivize them with the potential savings from which they will benefit. Taking the time to explore and execute green initiatives will improve the property’s overall appeal and value for both tenants and owners.

#4: Do Facility Tours To Quickly Identify Issues
If an industrial building has any hazardous substances in it or moving through it, you should conduct a tour at least every 12 months at the very minimum. It is key to understand the tenant’s business practices and work as a team to help ensure the necessary steps are being taken consistently to protect the property. It’s also a good idea to keep a safety log and update it regularly. Documentation/forms can also be added to the lease to ensure the information is being provided by the tenant.

#5: Know Your Tenant Base
It is important to continually track the tenant base within a particular area or submarket. Understand why they are there and what they are using the facilities for. It is good practice to keep complementary and compatible uses next to one another (think of visitors, traffic, noise, smells, waste, parking, loading, hours of operation, etc.) and to understand the configuration of the leased space and dock locations. Ask the questions: Will a tenant have more loading dock needs than another? Will a tenant have more employees and shift changes than another? What amenities or space configurations can be provided to make it a good situation for everyone?

Michel Hibbert of Charles Dunn Company represented the Los Angeles-based buyer, 6656 Fountain LLC, as well as the seller, Los Angeles-based 2469 S. Robertson Associates, LP in the transaction. The closing cap rate was 5.3 percent.

“This multifamily property recently underwent a major renovation making it an attractive asset in a prime Los Angeles submarket that is seeing a three percent vacancy,” said Hibbert.

The property was 100 percent occupied at the close of escrow and includes 17 one-bedroom/one-bathroom units, and one two-bedroom/one-bathroom unit. It has a secured entrance and a pool.

The first property is located at 1412 17th Street in Santa Monica near the major cross streets of Santa Monica Blvd. and 17th Street. The 7-unit property sold for $2,025,000 and closed escrow at a low 4.3 percent cap rate. The seller was Picone Trust and the buyer was LS Investments from Los Angeles.

“This property sold for $25,000 over the asking price and closed in just 14 days,” said Roberts Stepp. “This is another testimony to the reemerging strength of the Westside apartment market and a result of the current shortage of product.”

The second property is located at 2820 3rd Street in Santa Monica near Main Street. The 6-unit property sold for $1.55 million and closed escrow in less than three weeks at a sub 4 percent cap rate. The seller and buyer were both private investors from Los Angeles.

“The investment presented significant upside in rents. Additionally, the buyer had the opportunity to obtain seller financing on the property,” said Roberts Stepp. “Even with cap rates in the 4 percent range in the Santa Monica area, investors see the opportunity for a stable, well located investment that appreciates over the long term.”

A top broker with Charles Dunn Company, Roberts Stepp specializes in the sale and exchange of multifamily, development sites and commercial real estate in the areas of Santa Monica and the Westside.

Owners are also feeling pressure mount externally. All indicators point to increases in both utility costs and regulations in California over the next few years. Regulation in some municipalities, such as San Francisco, already require non-residential building owners over 50,000 square feet to provide energy benchmarking annually. During the next two years, the California Energy Commission will be establishing a schedule for compliance with AB 1103, which mandates energy benchmarking throughout the state for non-residential buildings. Understanding how a building uses energy compared to similar properties creates opportunities beyond compliance. It also reveals ways to strategically decrease a building’s energy consumption, often with free consultation from the utility companies including PG&E, Southern California Edison and others.

Despite the impending regulations and legislation, there is still some good news. Engaging in energy efficiency, recycling and other sustainable initiatives in existing buildings doesn’t have to tie up a huge amount of capital. There are numerous state and local government and utility green building incentives and programs such as rebates for low-flush toilet rebates by the LA DWP as well as financing opportunities for retrofits from the vendors that handle the energy retrofit installation.

Installing energy-efficient lighting alone can reap immediate cost-saving benefits and oftentimes, there are rebates of which companies can take advantage. To illustrate, we completed a retrofit of the lighting in common area corridors of an 84,000-squarefoot office building in Monrovia recently. The cost of the retrofit was just $11,500 after a $10,400 rebate from Southern California Edison was applied. The landlord’s investment is expected to be returned within only two years.

Finally, combining best practices for tune-ups and low-cost upgrades on any building can make it greener and will promote increased cash flow and value. For property owners wary about making large, capital-intensive upgrades in this economy, a staged approach is recommended. It begins with a building tune-up, which would involve examining building equipment, systems and procedures to ensure the property is operating as efficiently as possible.

Ultimately, all commercial property owners are affected by green initiatives. Making impactful enhancements with modest capital and taking advantage of incentives to address issues now is important as sustainable demand and regulations are amplified in the coming months and years.

By Patrick Conn

Article can be downloaded here [PDF]

Janet Neman and Bryan Glenn of Charles Dunn Company represented both sides of the transaction. The buyer was a Los Angeles-based investment company, and the seller was Los Angeles-based 4D Development. David Pourbaba, CEO of 4D Development, purchased the Mid-Wilshire portfolio as a distressed asset in 2011 from Wells Fargo Bank. Through repositioning of the asset and a change in management, he was able to improve the value of the portfolio and sell it approximately one year later for a substantial profit.

The closing cap rate was 7.16 percent. The Charles Dunn team won the listing over several other large brokerage firms and sold the property for substantially more than what other firms had originally suggested as an asking price.

“We won the listing based on our successful sales track record and knowledge of the local market,” said Neman who marks this as her fourth transaction she has participated in with this portfolio over the past 10 years. “We quickly identified a buyer who owned similar product in the area and put in a strong offer before the portfolio officially hit the market.”

The properties are all renovated 1920s Art Deco architecture buildings and include 97 studio units and 102 one-bedroom units. Following is information on each property:

• 3835 W. 8^th Street is six stories, was built in 1928, and includes 59 units
• 715 S. St. Andrews Place is four stories, was built in 1927 and includes 43 units
• 324 Catalina Avenue is four stories, was built in 1926 and includes 48 units
• 326 S. Normandie Avenue is five stories, was built in 1930 and includes 49 units

“The Mid-Wilshire multi-family submarket is showing strong rental demand with solid rental rates and the market vacancy factor at around four percent,” said Glenn. “This portfolio offered the buyer a rare opportunity to own vintage properties in great condition that are not subject to rent control.”

Glenn added that at the time of sale, the properties also had a higher than market vacancy factor and offered a repositioning opportunity through aggressive management.

Janet Neman is a senior managing director with Charles Dunn Company and is in the top 10 of the firm’s top producing agents. In 2011 she was chosen by Real Estate Forum magazine as a “Woman of Influence” in the commercial real estate industry.

The property was listed and sold by The Soroudi Group at Charles Dunn Company. The Soroudi Group specializes in selling and exchanging prime Westside properties. Hamid Soroudi of Charles Dunn Company represented the seller, Los Angeles-based GSR Apartments, LLC. Kimberly Roberts Stepp with Charles Dunn Company represented the buyer, Los Angeles-based TSI Property Management, LLC. The closing cap rate was 5.1 percent.

Built in 1991, the property is non-rent controlled and includes three one-bedroom/one-bathroom units and six two-bedroom/two-bathroom units.

“This property is situated in a prime Westside location,” said Soroudi. “Multifamily properties throughout the Westside market continue to be highly sought after by investors. Vacancy rates are hovering at around three percent and cap rates are low, reflecting the strong market fundamentals.”

Rene has completed in excess of 15 million square feet of transactions over his 15-year career and has worked with diverse business sectors including entertainment, media, law firms, insurance groups, non-profits, and public companies.  Some of the clients Rene has completed transactions with include TTG Engineering, Guidance Software, Magellan Navigation, Art Directors Guild of America, DVS TV, and the Community Development Commission of Los Angeles to name a few.

We will continue an aggressive recruiting campaign in 2012 as we seek to increase our transaction volume in all property sectors of our brokerage and property management divisions.