In the News

February 06, 2017

Why This L.A. Firm Is Investing in San Diego

Why This L.A. Firm Is Investing in San Diego

SAN DIEGO—Vista Investment Group studied the San Diego market for a number of years, making sure that if it made an investment in this region, the company would be as successful as it is in other markets, the firm’s president Jonathan Barach tells The firm recently acquired the 80­unit La Mesa Palms multifamily community at 4300 Echo Court here for $18.97 million, marking the Los Angeles­based real estate investment company’s entry into the San Diego market. The seller was a private family investor that had owned the property for more than 40 years.

The garden­style apartment complex consists of 20 four­plex buildings with spacious two­ and three­bedroom units that average 1,100 square feet. The property was 92.5% occupied at the time of closing. Vista will implement a multi­million­dollar capital­improvement program that will begin with upgrading the buildings’exteriors and grounds, as well as the interior renovation of vacant units. Unit upgrades will include quartz countertops, vinyl­wood­plank flooring, and stainless­steel appliances. Other units will be renovated as turnover permits, according to Barach.

HFF director Hunter Combs led the team that marketed the asset and represented both parties in the transaction. In addition, HFF’s debt placement team secured acquisition financing on Vista’s behalf.

We spoke with Barach about the San Diego market and what the firm likes about it. What appeals to you about the San Diego market?

Barach: San Diego is generally considered one of the most desirable places to work in the United States, with its 300­plus days of sunshine, outdoor lifestyle and dynamic economy. It has a young, skilled, and highly educated labor pool with a high concentration of tech jobs. In fact, the city ranks #1 in the nation for its number of high­tech industries. Many people don’t realize this, but San Diego County is the second most populous in California and the fifth largest in the country. However, and most importantly, the barriers to entry in San Diego are very high. There is little new supply, which puts upward pressure on rents and keeps vacancy low. The current vacancy rate in the La Mesa submarket is less than 2%. All of these factors combine to create an attractive and fundamentally sound investment climate for Vista to execute its business plan. Why the sudden foray into this market?

Barach: The foray into San Diego has not been sudden. We have been studying and exploring the market for a number of years now. As a company, I wanted to be sure that if we made an investment in San Diego, we would be as skilled and efficient at operating it as we are in the other markets where we own properties (Los Angeles and Bay Area). Moreover, there are few multifamily deals that trade for a market this size, forcing a value­add buyer such as ourselves to be patient for the right opportunity. What types of properties are you eyeing in this market?

Barach: Vista targets value­add multifamily, mixed­use and office properties in the $10­million­to­$50­million range located in urban­infill areas with proximity to jobs and amenities. We employ the same investment approach with our home market in Los Angeles and it has served us well. What other markets are you considering for investment?

Barach: Vista targets major infill markets throughout California, from the Bay Area and Silicon Valley, down to Los Angeles, Orange, and San Diego counties.

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