By Jon Peterson
San Mateo-based Essex Property Trust has acquired the 230-unit Sage at Cupertino apartment complex in Cupertino for $90 million or $391,000 per unit, as stated by the public REIT in its 2017 first quarter earnings report. The seller of the complex was an entity associated with Marcus & Millichap companies, with an address at 777 S. California Avenue in Palo Alto.
Essex used two capital sources to acquire the property. It converted an existing $15.3 million preferred equity investment in the property into a 40.5 percent equity ownership interest in the asset. The company also issued DownREIT units to the seller for the remaining equity based on the $90 million estimated value of the property. The apartment complex is encumbered by $52 million of mortgage debt at a rate of 3 percent.
Sage at Cupertino is located at 175 Calvert Drive. The complex was built in 1971, and the average rent in the property is $2,485 per month. The community is less than two miles from the new Apple campus, Apple Park, which opened this month, and in proximity to the Vallco Mall.
This property is now part of the portfolio of apartments that Essex owns in Santa Clara County. The public REIT holds ownership of 5,926 units in the region, according to its 2017 first quarter supplemental report. These assets make up 16.7 percent of the company’s total actual net operating income. The financial occupancy of this portfolio is 97.1 percent, which represents a 0.7 percent increases from the same time period of a year ago. The average monthly rental rate on these assets has increased by two percent over the same time period.
The development touts its Cupertino location on it site, including access to the Cupertino School District. The apartments offer updated interiors, accent walls, patios and balconies. The complex also has a pool, a clubhouse and a business center.