By Jon Peterson
Chicago-based Equity Residential is planning on a $170 million apartment development in San Francisco located adjacent to its 410-unit SOMA Square project, as stated during a conference call today to discuss its 2015 third quarter financial results.[contextly_sidebar id=”q2hcsh7NOWJYc0XueLO22ZrOJkNU1NNT”]The publicly-traded apartment REIT closed on the two land parcels for the new development during the third quarter, according to the company. The acquisition of these two sites was done for approximately $21.8 million.
Equity Residential is not planning on starting construction of these two parcels for some time. The REIT stated it its conference call that the project will likely not kick off until the first quarter of 2017.
During the third quarter, the company did complete the development of two projects in the greater San Francisco market. One of these was the 273-unit Azure at Mission Bay development. The total capital cost on this development was $189 million. As of the end of September, the project was 51 percent leased and 49 percent occupied. This development should become stabilized by the fourth quarter of next year.
The other project was the 173-unit Parc on Powell development in Emeryville. This project was formerly known as 1333 Powell, and the asset had a total capital cost of $87.5 million. The complex should become stabilized during this quarter, since it is 94 percent occupied and 92 percent leased.
San Francisco Bay Area will continue to be one of the company’s targeted markets in its pursuit of a bi-coastal strategy. Equity Residential did state in the conference call that it might be backing off a little bit of its development efforts going forward in the region.
Through the third quarter of this year, it owned a total of 53 properties in the region totaling 13,654 units. This portfolio made up 15 percent of the company’s stabilized net operating income. The average occupancy in this portfolio was 96.5 percent.
Rendering courtesy of HKS