A California-based real estate investment partnership has purchased more than a dozen apartment buildings in the City of Buffalo in a deal totaling more than $11 million.
Horizon Buffalo Portfolio II LLC, located in West Hollywood, Calif., has acquired 19 properties, primarily in the city's Allentown neighborhood, in a $9.7 million deal that closed Feb. 10. The California group has leased three other properties that it plans to buy in the next 90 days, bringing the total value of the acquisitions to $11.6 million.
Horizons Chief Operating Officer Michael Hananel said he's very excited about the Buffalo acquisition.
"We see great potential in these properties and in the Buffalo market. We're hoping to make additional acquisitions," Hananel said.
The new owners also plan to have a "hands on" relationship with their Buffalo holdings.
"This isn't going to be a long-distance relationship. We're going to be there a lot and we'll have a strong local management team there full-time," he said.
Chris Greco, of Buffalo-based Greco Real Estate, who brokered the deal, said it is one of the largest residential purchases by an out-of-town interest he's seen.
"This is definitely one of our larger deals and one of the biggest we have heard of in Buffalo. They will start off with a very strong presence in the city and a good collection of buildings," Greco said.
The list of properties now in the hands of the California group includes: 945 and 950 W. Ferry St.; 247, 255, 257 and 261 W. Utica St.; 201, 257 and 1095 Elmwood Ave.; 575 Colvin Ave.; 519 Virginia St.; 2435 Delaware Ave.; 2720-2730 and 2779 Main St.; 420 Jersey St.; 2 N. Pearl St.; 49 Johnson Park; 197 North St.; and a portion of 1514 Main St. Many of these buildings house 20-plus apartment units.
The leased properties are located at 209 and 217 Elmwood Ave. and 228 Summer St. Horizon expects to own those apartment buildings in the next 90 days. All of the properties, except for 2779 Main St., had been owned by Anthony J. Trusso and his Buffalo-based AFT Property Management.
The Horizon investors became interested in Trusso's Buffalo holdings after acquiring an Alden mobile home park and a Derby apartment complex through Greco's firm last fall. Greco has done several deals for Trusso and was familiar with his properties.
"As we were working with Horizon on the Alden and Derby deals, we built a relationship and became aware they were looking to make additional purchases," Greco said. "We'd done a lot of work for Tony Trusso and thought they'd be a good fit for Horizon."
Horizons' new Buffalo portfolio totals 388 apartments, plus a small commercial building that served as Trusso's headquarters at 257 Elmwood Ave., which now will house the California firm's local management offices.
Brett Neubig, a Horizons spokesman, said the new owners "are mindful of the integrity" of its Buffalo buildings, some with which date back to the turn of the century.
"They plan to make significant, ongoing investments in these properties. This is not a case of someone coming in and buying up real estate and not spending a dime," Neubig said. "These buildings will see exterior and interior upgrades, and landscaping improvements."
He noted that work already has started to renovate 261 W. Utica St., a single-family home which is part of the portfolio, which the new owners will use as corporate residences when they visit Buffalo.
According to papers filed with the Erie County Clerk's Office, the Horizons ownership group includes a second limited liability corporation, 9714 Regent St. LLC, and five individual California investors.
In addition to its new Buffalo properties, Horizon controls some 300 residential units in Decatur, Ill., plus another 800 units in the Los Angeles area.
The California group got off to a slightly rocky start with its Buffalo portfolio when residents of the Fenton Apartment complex on West Ferry Street lost electrical service the day before it took ownership. National Grid cut off power to the 24-unit building due to a mix-up in the title transfer process.
The Buffalo Fire Department was called to the scene following reports of carbon monoxide in the complex caused by tenants using gas stoves and ovens to warm their units.
"That was very uncharacteristic of how Horizon does business," Neubig said. "There was an unfortunate miscommunication which was dealt with as soon as they became aware of the situation."
Two days after the sale, police SWAT teams raided 49 Johnson Park as part of an investigation, breaking down the front door.
"One of things we'll be doing in the future is thorough tenant background checks. We don't plan to rent to criminals and we want the bad guys out," he said.
Trusso, whose real estate management offices are currently located at 257 Elmwood Ave., will be relocating his business to the Lenox Hotel, at 140 North St. The investor purchased the historic, but faded, circa 1896 hotel last summer for $2.4 million with plans to make major interior and exterior improvements. The 147-room hotel, located near the corner of Delaware Avenue and North Street, operates as a mix of hotel rooms and apartments.
Trusso, who sold another 15 Buffalo residential properties over the past year, purchased the former Romanello's Roseland Restaurant site at 490 Rhode Island St., which now operates as Prime 490, a steakhouse eatery.