In the midst of an economic recession that’s made it hard for some tenants to make rent, Optimus Properties is still snapping up multifamily real estate when it comes onto the market.
The Century City, California-based real estate firm closed on a 100-condo acquisition in Van Nuys this week after entering the Pasadena market with a 38-unit apartment building in April.
Principal Kamyar Shabani, who started Optimus with his brother Joseph in 2007, told me that the company made seven acquisitions in 2019 and hoped “to do something similar” this year, but transactions have slowed “not because our appetite per se but because the number of deals have dropped because sellers are hesitant in an unknown or turbulent market.”
The company, which focuses on value-add acquisitions, found the Van Nuys property to be “an interesting opportunity” because of its size and the grounds “were nice and maintained,” Shabani said. “We liked the location in the Valley,” he added, calling it “somewhat underappreciated or undervalued because the Westside is expensive so people are looking to move to the Valley.”
Similarly, Optimus pounced on the Pasadena apartment building because “you don’t really get a lot of opportunities to buy quality assets in Pasadena.” Again, the firm liked the size and location of the property near Old Town. “We liked the bones, meaning it had a nice courtyard with a pool in the middle [and] landscaping. That was another deal where it needed a little bit of elbow grease to improve the asset, but Pasadena is a known commodity in terms of the city.”
Although stay-at-home orders during the coronavirus crisis have caused a surge in layoffs and furloughs that have made it challenging for some tenants to pay the rent, Shabani estimated that his company is collecting at least part of the rent from multifamily tenants in the mid-80% range.
Optimus, whose portfolio also includes retail, office and medical office properties in California, Washington and New Mexico, is seeing similar rates among its commercial tenants, though in the long run “multifamily is probably doing better with Covid than office and retail,” Shabani said. “The fallout with office and retail will be longer and deeper.”
He added that Optimus is having “daily conversations” with its office and retail tenants about “what their future at the property is, whether they want to stay.” Shabani said that the company is encouraging its commercial clients to stay with rent abatements and deferments. “We’re working with tenants because this is the time to be flexible,” he said.
Long-term, however, “unfortunately there are some retail tenants that are just not going to be able to [survive] this terrible storm,” Shabani added. Meanwhile, among office tenants, he forecasts that some “may start downsizing to allow people to continue to working from home.”
Multifamily is integral to Optimus’ business. The category makes up the majority of the company’s business, if not square footage or revenues. And the company’s very first deal after Shabani and his brother went into business together was a multifamily property in the Valley.
They both followed in the footsteps of their father, Houshang, who moved the family from Iran in 1978 as political and religious refugees.
“When the Iranian Revolution happened, we came to the U.S., as did a lot of other Persian Jewish people,” Kamyar Shabani said.
His father started out in the U.S. selling garments, then transitioned into real estate, where he was joined by Shabani’s brother Joseph.
Meanwhile, Kamyar practiced transactional real estate law at Gibson, Dunn & Crutcher. He wanted to get into the business side of real estate, however, and joined the family business, pushing it toward multifamily as well as syndicating deals.
Kamyar mostly handles multifamily, Joseph mostly commercial, but both are involved in “any major decisions about a deal.”
Optimus now employs 33 people.
“I really love the city of L.A.,” Shabani said, despite the challenges of its spread-out geography, including traffic and homelessness. “I love the mosaic of the city in terms of how diverse we are as a community. I love the diversity of architecture, food, people, landscapes. It’s one of the only places I know where you can go surfing in the morning and skiing in the afternoon if you wanted to.”