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With some rents up, careful investors are buying

LARKSPUR-BASED LRG MAKES FOUR PURCHASES IN MARIN, EYEING OTHERS

LARKSPUR – At a time when financial markets are panicking about the health of global banking systems, LRG Capital Group is finding it to be a great time to invest in commercial real estate.

“There are a lot of good assets on the market,” said LRG founder and CEO Larry Goldfarb. “It’s a great time to be buying at prices that really make sense.”

Tightened requirements for home mortgages are contributing to higher occupancy and rents in rental properties, according to multifamily property broker Scott Gerber of NorCal Commercial. His latest survey of complexes with more than 10 units found that rents for units of all configurations increased an average of 3 percent to 8 percent in Sonoma County from a year ago and vacancy dropped to 2.7 percent. Similar data for Marin is not yet available.

At the same time, lenders are requiring buyers of commercial properties to bring more of their own money to the acquisition, and that is adjusting asking prices closer to the revenue potential of the North Bay properties, according to Mr. Gerber.

In that environment, Larkspur-based LRG, a group of investors and advisers, has acquired four commercial properties in Marin since launching its LRG Capital Real Estate Partners Fund I last month and has a pipeline of prospective property purchases pending with multiple money-center and community banks interested in participating.

The latest are a 43-unit apartment complex at 220 Canal St. in San Rafael and the three-story 19,500-square-foot first office building at San Marin Executive Center in Novato. Previous deals include the 35,000-square-foot historic brick kiln office building and restaurant at 125 E. Sir Francis Drake Blvd. in Larkspur and the 26,000-square-foot two-story office building at 384 Bel Marin Keys Blvd. in Novato.

The properties fit with LRG’s “extraordinarily conservative” investment approach by being well-maintained, 90 percent to fully leased and having positive cash flow.

With those components in place, the 60 percent to 65 percent loan-to-value ratio common these days and at least a seven-year fixed-interest term can make these acquisitions make sense.

LRG Real Estate Ventures has direct or securitized stakes in properties worldwide with a market capitalization of more than $1 billion. But for investments going into the new fund, the firm is focusing on properties near major metropolitan areas in California, according to Mr. Goldfarb. One of the many prospects is a Sonoma Valley property in contract.

For more information, call 415-834-4600 or visit www.lrgcapital.com.