Cazador Investments, LLC has closed on five separate acquisitions across San Diego County in the last nine months, totaling 44 multifamily units and 4 commercial spaces in several desirable submarkets. Hunter Beaumont, President of Cazador, comments, “These acquisitions were each situational opportunities where we could get into strong value-add candidates in attractive areas and at a great basis. Discount to replacement cost is one of our most important metrics, and these assets were all acquired at a substantial discount to what it would cost to build them today.”
The five assets range between 3 and 22 units
each and are located in desirable areas including Old Town, Oceanside, Vista and the College Area. A unique challenge of this portfolio is that the assets vary in age of construction from 1915 to 1987. Cazador targets moderate to heavy value-add candidates that might scare off other buyers, and relies on a thorough due diligence process and significant experience with such renovations to ensure successful value-add.
“As most housing experts recognize, San Diego is in a long-term supply/demand imbalance at present. Because of the high price of land and complicated regulation on new development, we are building less than half of the housing we need for our growing population each year. This high cost of land also results in almost all new construction in San Diego being positioned as luxury product, as building lesser-grade apartment product usually doesn’t pencil. We believe this positions the well-located Class B/C+ apartments we target and acquire well for continued outperformance in terms of rent growth and occupancy,” states Hunter.
Cazador began investing in San Diego multifamily in 2012, and is a strong proponent of the local economy and demographics. Cazador plans to continue acquisition activity during 2018, with the goal of acquiring 50-100 or more units locally during the year. Hunter continues, “We are in an extended cycle and pricing is aggressive, but we continue to look for unique opportunities where we can get into assets at a low basis and add value. We partner with patient capital and utilize fixed rate debt. We are long-term thinkers and will continue to try to grow the portfolio through 2018 and beyond.”