Poppies Corp. 2005
Projects
Atlantic Condos
Conversion of 14 unit Building to Condominiums
Long Beach, CA
Please Note: The following project was placed under contract by others who approached Mark Frauman to arrange (and represent) investment funding and provide operational and organizational support and experience. The physical conversion is not a construction project undertaken by Poppies Corp.
Project Summary: A California Limited Liability Company was formed to acquire and convert to condominiums an existing multi-use building on Atlantic Avenue in Long Beach. The three-story property with grade level parking consists of 12 residential apartments (8 units of 1224 square feet and 4 units of 1240 square feet) and two commercial spaces (1100 and 1700 square feet respectively).
Status: The property was originally built as townhouse style condominiums in 1992 and the final tract map as condos was completed but not filed due to the poor economy in California at the time. In order to facilitate a rapid conversion process, an experienced condo-conversion firm was awarded a contract to coordinate the conversion process. In June of 2003, the Long Beach City Council approved the conversion project based on the tentative tract map and conditions of approval outlined by the city Planning Commission. The LLC closed escrow on the property in November of 2003. Bureaucratic delays and an undiscovered mold problem revealed during the construction process slowed the conversion, but eventually all the units were sold by the end of 2005. Construction was minimal as the only work required for the conversion was general fix-up, new carpeting, paint, window treatments and fixtures and to reseal large planters in the common area (the source of the mold problem).
Financial Summary: The property was purchased at a price of $2,100,000. The units are 2-story, townhouse style condominium units and as such, have a higher value in the market than ordinary flat condominiums which are the predominant condos on the local market. Also, most 2 bedroom condominiums in this price range are significantly smaller, typically in the 900 – 1,000 square foot range. At the time of the purchase, projected revenue from the sale of the condos was estimated at $3,160,000 (approximately $225,700 per unit). The delays in obtaining the necessary approvals worked in favor of the investment as the market stayed strong and inventory of competitive for-sale residential condos was low. The residential units sold for an average of $345,000 providing gross revenues of almost $4,500,000.
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