Looking for a Solid B

Tru-America Multifamily, founded 18 months ago, is strategically targeting “B” properties in the western part of the US in hopes of developing a portfolio that can generate higher than average rent gains in coming years:

The company says its strategy is to buy lower-grade buildings, renovate the units and “reposition” the properties as slightly more modern and higher-end in hopes of charging higher rents. The company estimates it will be able to raise rents an average of 6.4% a year, about 1.4 percentage points higher than it expects average rents to rise in Southern California submarkets…

Like most of its previous acquisitions, TruAmerica’s newest assets in Southern California were built in the 1980s. The 2,669 units in the region are spread out in lower middle-class neighborhoods, such as San Pedro and Santa Clarita in Los Angeles County, El Cajon in San Diego and Ontario and Riverside in the Inland Empire.

TruAmerica says it plans to invest approximately $40 million in upgrades, including the installation of new cabinets, new floors and, in some locations, modern fitness centers and common areas. Those improvements will “make it a more Class-A feel,” says TruAmerica Chief Executive Robert Hart, who holds a 20% stake in the company.