A San Ramon apartment complex located near Bishop Ranch, the massive East Bay business park that is home to the Chevron Corp., has sold to a San Mateo-based institutional investor for $40 million, or $200,000 a door.
Acacia Capital Corporation has bought the Bridges at San Ramon, a 1980s era apartment development, from San Diego-based Pacifica Cos. It is the first apartment sale in San Ramon in three years involving a complex with more than 100 units, according to Cushman & Wakefield research. It is only the fourth such transaction to have closed since 2000.
The project’s location was a critical component of investors’ interest in the property, said Cushman Executive Director Seth Siegel and Director Jason Parr. Both men were on the Cushman team that represented the seller in the transaction.
“It is a great location and that is what sold the deal,” Siegel said. “You have two employment bases—Silicon Valley and Bishop Ranch. The property is consistently very well leased. The proximity to the [U.S. 680] highway is excellent, and you have shopping nearby. That is meaningful to people.”
There were 24 offers for the property, Siegel said, and multiple bidders were in the same price range as Acacia.
Neither Acacia nor Pacifica returned calls for comment.
Based on in-place rents at the time of the sale, the buyer would receive a 5 percent yield in the first year, Parr said. “The buyer is a major Bay Area and West Coast manager of apartments,” he said. “They will get a bump in income just from their management expertise.”
Pacifica acquired the property from Archstone in January 2006 as part of a larger purchase involving 496 units. Pacifica sold 296 of the units as condominiums, leaving the remaining 200 units as rental housing.
Pacifica borrowed in excess of $139 million to buy and convert the units to condominiums in 2006, paying more than $280,000 a door, according to a news release published at the time by their lender, CWCapital.
Real estate investment trusts, which have been among the most aggressive players in the multifamily arena in the last several years with new development and acquisitions, were not significant competitors in the deal because of the property’s age, Parr said. Private, high-net-worth individuals were shut out because of their borrowing costs. That left private companies and fund managers using institutional money.
Acacia is a fund manager that focuses on residential property, according to its Web site.
“The story is interesting because it is a core location right next to Bishop Ranch, but it is a value-add opportunity because the interiors need renovation,” Parr said. An onsite clubhouse is also slated for renovation, he said.
The apartments do not share amenities with the condos. They include a pool, a playground and tennis courts.
Average asking rents for apartments in San Ramon grew 6.5 percent year-over-year in the first quarter to $1,537. That was despite a slight decline in average occupancy rates during the same period, according to RealFacts, the Novato-based multifamily market researcher.
The patterns largely echo those across Northern California in the last year, RealFacts’ data shows, with an important caveat: San Ramon rents have been consistently about $200 a month higher than those of the region at large.
In addition, the RealFacts report shows that overall rent increases in San Ramon have been driven especially by rent growth for two-bedroom, two-bath units, both single-story and two-story, town home configurations. More than a third of the units at the Bridges at San Ramon are two-bedroom, two-bath units.
All 44 of the markets that it tracks will see a drop in vacancy rates in 2011, the first time that has happened since 1990, according to a national apartment-market forecast by Marcus & Millichap Real Estate Investment Services. San Jose and San Francisco are both among the strongest apartment markets in the country, based on an analysis that includes anticipated employment growth, new construction and housing affordability. The East Bay and Oakland also rank in the top half nationwide.