Denver-based Apartment Investment and Management Co. has acquired a 126-unit complex in tiny, tony Corte Madera in Marin County.
The nationwide apartment REIT plans a total investment of approximately $65 million, or nearly $516,000 a unit, including the acquisition price and cost of redevelopment. The Madera Vista complex, which is empty and has been for some time, is at 300 Robin Drive.
The seller and a former majority owner of the property was The Rockpoint Group, a Boston-based real estate investment management company. The minority owner was Stellar Management, a New York City-based investment firm.
AIMCO expects its redevelopment to take about 18 months including upgrades to a swimming pool, club house and fitness center. Madera Vista was originally developed in the late 1960s and early 1970s.
A non-disclosure agreement between the buyer and seller prohibited AIMCO from stating its exact purchase price. Rockpoint did not respond to requests for comment.
According to industry sources, the complex suffered a fire in one of the buildings in 2008, and all tenants eventually were moved. The former owners fully rehabilitated all of the buildings, and gained city approvals to convert them to condos. But none were ever sold.
AIMCO follows San Francisco’s MacFarlane Partners into the Corte Madera multifamily market. MacFarlane acquired 4.5 acres in the town earlier this year to redevelop it into 180 apartments. Their site is known locally as the WinCup property for a former manufacturing facility that operated there. At the time of the acquisition, MacFarlane said it expected the project to cost $68 million. It paid more than $18 million for the land alone.
Corte Madera has an estimated population of not quite 10,000 and a median household income that is not quite twice that of the nation at large, according to the most-recent U.S. Census Bureau estimates. Per capita income exceeds $58,000 annually, more than twice the U.S. rate.
“This property gives us a chance to grow our portfolio in one of our targeted markets,” said John Bezzant, an executive vice president for AIMCO. “We like the San Francisco region. It has good job growth and has constraints on the future supply. We are going to continue to pursue additional deals for acquisition or redevelopment.”
AIMCO believes the apartments are well-situated. They are less than a half mile from the Marin Country Day School and not quite 3 miles from the 447,000 square-foot Town Center Corte Madera, which is anchored by Barnes & Noble Booksellers, a Safeway grocery store and a California Pizza Kitchen.
The company expects middle-aged professionals to be its primary tenants. “We are not figuring that the renting audience will be the young working professionals. It will be a more mature renting audience with the average age of the renters being 35 or older,” Bezzant said. “Some of the renters will be people who work in Marin County and others who work in San Francisco.”
AIMCO won’t start to market the units for at least another five months.
Like the apartment market in San Francisco, occupancy is high in Marin County.“We see vacancies for apartments in the range of 2 percent,” said Brad Pennington, a first vice president for Marcus & Millichap in its Multi-Housing Group in San Francisco. “Rents in the market started to move up about six months ago,” he said.
Still, Marin County investors are buying at yields anywhere from a half percent to a full 1 percent higher than investors buying in San Francisco, according to the latest Marcus & Millichap research.
AIMCO is already a significant player in the San Francisco apartment marketplace. It owns 10 complexes in the region with 1,845 units. That includes assets in the East Bay, San Francisco, Marin County, San Mateo and San Jose. The apartment REIT is known nationally as a buyer and investor in market-rate and affordable apartments. It owns 607 complexes with approximately 500,000 residents in 38 states.