Union Building Trust Funds All Development Costs for San Mateo Apartments
By Jon Peterson
The Washington, D.C., -based AFL-CIO Building Investment Trust will finance 100 percent of the development costs for a 155-unit apartment complex to be located at 888 N. San Mateo Ave. in San Mateo. The trust also will be the 100 percent owner.
The $68.9 million luxury project will be situated about five blocks from tony downtown Burlingame, where Apple Inc. and other national and international retailers as well as local merchants do business on Burlingame Avenue and nearby side streets.
One existing building on the site is to be demolished in June, and the Building Investment Trust expects a 24-month construction timeframe. As yet, the development has no official name.
“There were several things we liked about the project,” said Kevin McCarthy, president of PNC Realty Investors. Washington, D.C., -based PNC is an investment adviser to the AFL-CIO trust.
“First is that the economy in that part of the San Francisco Bay Area is very vibrant. The region has a very strong, educated workforce that is still growing and expanding. The cost for single-family housing is very high, leading many segments of the population to become renters. The area has very high barriers to entry, which should limit competition in the future,” he said.
The fee developer for the complex is the Sares Regis Group of Northern California.
“We are not the first developer that tried to get the project approved. There were at least five other developers that tried to make this project work over the past 10 years,” said Drew Hudacek, chief investment officer, development properties for Sares Regis in its San Mateo office. “In some cases the proposed development was more than 200 units. We feel comfortable with the number of units that we will be building.”
The development represents a new relationship between Sares Regis and the Building Investment Trust.
“Vacancies for apartments in San Mateo area are now in the 2 percent to 3 percent range. We don’t see the market changing much based on how difficult it is to get new projects approved in the area, “ Hudacek said.
The Building Investment Trust is a core open-ended commingled fund established in 1988. Assets in the fund were valued at $2.9 billion through the end of March. The vast majority of its investors are union pension funds. The trust is always open to new investors.
The Building Trust owns several additional San Francisco Bay Area properties. These include the 404,000 square-foot 199 Fremont St. office building in San Francisco and the 262,000 square-foot Hacienda Crossing Shopping Center in Dublin.
Picture: San Mateo Caltrain station