Pacific Urban Buys Two Apartments in Sunnyvale
By Jon Peterson
Palo Alto-based Pacific Urban Residential has acquired two apartment complexes in Sunnyvale. It paid $50 million or $340,000 per unit to acquire the 147-unit Citra apartment complex located at 745 South Bernardo Avenue. The other acquisition the buyer declined to comment on because of a non-disclosure agreement with the seller, according to Al Pace, president and chief executive officer with Pacific Urban.
Pacific Urban Residential feels good about the current market demographics on the apartment market in Sunnyvale. “We have taken a long position on the market in Sunnyvale. We believe that the market is strong. There is very good rental demand there for apartments and the technology companies are creating strong job growth. This situation should be that way for a while,” says Tricia Peterson, director of capital markets for Pacific Urban.
The buyer considers the property to be a B quality asset. “There will be a significant amount of work done to the property by us to improve it going forward. This kind of work and the quality of the asset is the main line of business for us,” said Peterson.
Citra is an apartment complex that was constructed in 1968. Pacific Urban acquired the property for a life company that the buyer has a relationship with. It would not reveal that name of its client. This relationship is one where the life company funds transactions on a deal-by-deal basis.
The other property in Sunnyvale that Pacific Urban bought was one that was purchased on behalf of the California Public Employees Retirement System. This property is one of the first deals that Pacific Urban has closed on for its partnership with CalPERS, Pacific Multifamily Investors.
CalPERS and Pacific Urban formed this partnership in January of this year. The first funding for the partnership is for $200 million from CalPERS.
Pacific Urban has investment discretion on the partnership, which will allow it to make the final investment decisions if it stays within the agreed upon investment guidelines.
Pacific Urban Investors has a core plus strategy to invest in B quality apartments. This means to buy existing properties that have a solid income foundation and need a limited amount of capital to improve the asset in the future.
The apartment data for the Sunnyvale market suggests an up and down market. RealFacts, a San Francisco-based apartment data company that tracts apartments of 50 units and larger, stated in its fourth quarter 2013 report that there was a 10.5 percent increase for asking rent from $1,927 to $2,129 over the previous 12 months. It also showed a 1.5 percent drop in average occupancy rate from 96.1 percent to 94.6 percent from the fourth quarter of 2012 to the fourth quarter 2013.
Pacific Urban has closed on one other apartment complex in California. It paid $20 million or $150,000 per unit to buy the 133-unit Silver Oak Apartment complex in San Diego. This property was developed in 1976.