Finance  ·  Sales

Rio Properties Breaks Up Multifamily Portfolio for $30M

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Rio Properties has divested a five-asset multifamily portfolio through a set of moves involving multiple buyers, brokers at Colliers (CIGI) announced Tuesday. 

In a series of deals valued at approximately $30 million, Rio exchanged three of the properties into tax-sheltered multifamily funds, while the other two transferred to REITs in order to take advantage of their individual tax benefits, according to Colliers. 

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Advanced Real Estate, which is also represented by Colliers, acquired two properties, at 1400 and 1500 Venice Boulevard, in Venice, Calif., through a contribution fund agreement for more than $13 million. Advanced plans to ultimately dispose of the properties via a property swap known as a 1031 exchange that will defer capital gains taxes.

“Our plan for ‘The X Fund’ is to gather as many smaller properties as possible, renovate them (if needed) through our in-house renovation company, manage them well, and improve their value,” Advanced CEO Richard Julian said in a statement. “Ultimately, we will sell this portfolio and trade into much larger and more efficient properties. The large properties we trade into will be held in our fund indefinitely. The responsibility of handling that 1031 exchange will not fall onto our investors, but onto Advanced, and we are accustomed to that process. Also, we have our other funds to purchase parts of the up-leg trade properties if needed, minimizing any risk.”

Virtú Investments, likewise represented by Colliers, obtained 612 Mariposa Avenue, in Oakland, Calif., through a contribution fund for $10.6 million. 

Meanwhile, the remaining two properties at 4034 Redwood Avenue in Los Angeles and at 5100 Via Dolce (Unit 311) in Marina Del Rey, were sold and transferred to REITs with Ares Management (ARES) and RBC Capital Markets. The eight-unit property at 4034 Redwood Avenue was sold at roughly $480,000 per door and a 4.2 percent cap rate, while the property at 5100 Via Dolce sold at roughly $760 per square foot.

Occupancy in the Greater Los Angeles multifamily market remained unchanged at 95.3 percent in the fourth quarter of 2023, compared to the previous quarter, though decreased by 20 basis points year-over-year, according to a recent analysis by Colliers. Average effective rents have decreased for two straight quarters, though are still 10.5 percent higher than they were before the COVID-19 pandemic. 

Nick Trombola can be reached at NTrombola@commercialobserver.com.