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Archstone breaks ground on project

Developer unveils plans for 157-unit rental townhome venture near Highway 14 in Santa Clarita

Posted: April 7, 2012 1:55 a.m.
Updated: April 7, 2012 1:55 a.m.

Archstone Executive Vice President Richard Lamprecht speaks to the attendees during the groundbreaking ceremony of the Archstone Rental Townhome Development in Santa Clarita on Thursday. Officials said the first units will be available in spring 2013.

A Denver-based developer unveiled plans for a new 157-unit rental townhome project in Santa Clarita on Thursday.
Archstone, a leading apartment investment and operations company, announced that it has begun construction in a joint venture with a division of The Resmark Companies, a full-service real-estate investment adviser.

The company held a groundbreaking ceremony on its 12.49-acre site located east of Highway 14 on Via Princessa and Lost Canyon Road. Archstone expects the first units to be ready by the spring 2013.

The new development comes at a time when low rental inventory and changes in rental habits has resulted in a drop in Santa Clarita’s vacancy rates.

In the fourth quarter of 2011, vacancy rates dropped to 5.5 percent from 7.5 percent for the same period from the prior year, said Stacie House, marketing and business-retention manager for the Santa Clarita Valley Economic Development Corp.

The last period when permits were pulled in the Santa Clarita Valley was 2010. Twenty mutlifamily permits were pulled in the SCV in 2010, said Holly Schroeder, CEO, of the Building Industry Association Los Angeles/Ventura chapter.

“We put so much work into designing this community,” said Peter Jakel, communications director for Archstone. “It is really, truly designed to fit into this community.”

The plan is to build 3-bed, 2.5 bath townhomes with two-car garages and high-end finishes. Archstone’s plans also include adding a number of amenities, such as a resort-style pool, spa, yoga lawn, club lounge, business center, fitness room, barbecue area and playgrounds.

Archstone’s development in Santa Clarita is a first for the company, said Rick Lamprecht, executive vice president of investments for the West Region.

Santa Clarita was selected because of its low unemployment rate compared with the rest of California, and its close proximity to shopping, schools and jobs, making it “very attractive to families,” he said.

“We think that it’ll be a great addition and fill a need,” Lamprecht said.
Path to recovery

Archstone has a portfolio of properties it has acquired and developed across the country and in Germany.

Lehman Brothers Holdings Inc., with help from lenders, acquired Archstone for a reported $22 billion in late 2007, before the collapse of the housing market and official onset of the recession.

In 2008, Lehman Brothers filed one of the largest bankruptcies in U.S. history.  Its purchase of Archstone and is overleveraged real estate acquisitions played a key role in Lehman’s failure,  according to International Business Times.

Lehman now owns 47 percent of Archstone after restructuring, with the remaining 53 percent owned by Bank of America and Barclays, a global financial services provider, according the New York Times.

In December 2011, Bloomberg News reported that Lehman offered to buy half of the stake in Archstone owned by Bank of America and Barclays. As of September 2011, Archstone had 428 apartment complexes.

Chicago real-estate mogul Sam Zell has been bidding for half of the lenders’ interest on behalf of his company, Equity Residential. In February, the Wall Street Journal reported that Zell agreed to raise the minimum price to $1.485 billion for 26.5 percent of Archstone. Zell’s betting on a market trend of low vacancy rates and rising rental demand, Bloomberg reported.

Zell bought the Tribune Company, owner of the Los Angeles Times, in 2007, adding $13 billion in debt on the company, forcing it to file bankruptcy in December 2008. The bankruptcy has yet to be resolved.

Lehman and the lenders have all been slugging it out in court over who buys what shares in the complex sales process, according to a Washington Post report published Thursday.

Lamprecht and Jakel said they had nothing to say about the sale of the company or leading buyers.

In the meantime, Archstone continues to focus on building a healthy portfolio of properties.
Lucrative markets

The SCV development is the first groundbreaking event on the West Coast for Archstone since 2007, Lamprecht said.

It’s been five years since the company last started a deal, but it has a few opportunities Lamprecht believes will come into fruition in the next 12 months, he said.

Southern California is the company’s largest market, Lamprecht said. The company has apartment communities in Los Angeles, San Diego and San Francisco, along with properties in Washington, D.C., New York, Seattle and Boston.

In November, it acquired a 9.2-acre site in Phoenix and announced plans to build a 224-unit apartment complex in Scottsdale.

“We’re looking to get back into the communities and deliver housing,” Lamprecht said. “We’re excited about Santa Clarita.”

As for why Archstone picked the specific location for its new complex, Lamprecht said, “All you have to do is drive by and see the 14 and all the thousands of people driving by.”

Signal Staff Writer Sara Mitchell contributed to this report.


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