Essex Sells San Mateo Apartment Community for $113MM

Essex Property Trust, San Mateo, Irvine, Ventura, Simi Valley, Advanced Real Estate Services

By Jon Peterson

San Mateo, Calif.-based Essex Property Trust has sold three apartment complexes in the state that are located in San Mateo and Southern California for a combined $275.5 million, as stated by the real estate investment trust in its 2021 first quarter earnings report.

The property in San Mateo was the 197-unit Park 20 San Mateo complex. This asset had a sales price of $113 million, or $574,000 per apartment home. The seller had a 100 percent ownership position in the property, and it did not state who the buyer was. The asset is located at 1950 Elkhorn Court.

One of the properties in Southern California is the 324-unit Hidden Valley asset in Simi Valley. This property was sold for $105 million, or $324,000 per unit. The asset is located at 5065 Hidden Valley Court. Essex owned the property all by itself and it did not disclose who the new owner is.

The other Southern California property was a $57.5 million sale for a 100 percent interest on the 115-unit Axis 2300 complex in Irvine. The address of the complex is 2300 Dupont Drive. According to published reports, the buyer of this property was Irvine-based Advanced Real Estate Services. This company buys properties with its own private capital sources. 

Essex, which is based on Northern California, has within its apartment portfolio a total of 1,962 units in San Mateo County, according to its 2021 first quarter earnings report. On this portfolio the public REIT did see a drop in both financial occupancy and average monthly rental rates over the past 12 months. The financial occupancy fell by 1.3 percent from 96.7 percent to 95.4 percent. Rental rates fell by 8.7 percent from $3,128 to $2,855 on a monthly basis.

The Hidden Valley project is located within Ventura County. Essex owns a total of 2,253 units in this county, according to its latest earnings report. This part of the REIT’s portfolio had an increase for both occupancy and rental rates. Occupancy went up by 1 percent to 98 percent over the past year, while the rental rates moved up by 1.1 percent to $1,908 per month.

The Axis 20 property is with the Orange County portfolio held by Essex, which totals 5,439 units. This portfolio’s occupancy had a 0.7 percent increase to 97.1 percent and rental rates moved 0.1 percent to $2,239 per month.

In its 8-K filing, the company indicated that its net income for three months of 2021 per diluted share fell by 45.6 percent over the same period in 2020. Same-property gross revenues and net operating income (“NOI”) declined by 8.1 percent and 12.3 percent, respectively, compared to the first quarter of 2020, according to the company’s filings. The decline in same-property gross revenues and NOI is primarily attributed to lower scheduled rents and higher cash concessions compared to the prior-year period.

“We are pleased with our first quarter results, which exceeded the midpoint of our initial guidance. Although the West Coast markets are still in the early stages of an economic recovery, we are cautiously optimistic that declining COVID cases and widespread vaccinations will provide a foundation for a long economic expansion. Encouragingly, the large tech employers in our markets have accelerated hiring and are beginning to reopen their offices which should improve apartment demand, consistent with our expectations at the beginning of the year,” commented Michael J. Schall, President and CEO of the Company in a statement issued in the 8-K report.

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