Essex Spends $414MM on Three Apartment Deals in the San Francisco Bay Area

Township Apartments Redwood City Nuveen Real Estate Institutional Property Advisors Marcus & Millichap Peninsula Bay Area

By Jon Peterson

San Mateo-based Essex Property Trust has acquired three apartment complexes in Emeryville, Menlo Park and Redwood City with the total acquisition cost of $414.7 million, according to the public REIT’s third quarter 2019 earnings report.

The largest of the three acquisitions was the $178 million purchase of the 331-unit The Courtyards at 65th Street in Emeryville ($537,764 per unit). Essex is no stronger to Emeryville, since the investor has other properties in the area like Emme and Avenue 64 communities.

The public REIT acquired this property for its joint venture known as Wesco V, where it owns a 50 percent interest in the relationship. The other 50 percent stake is owned by the State of Wisconsin Investment Board. The venture was created in 2017 where the pension fund made a $150 million equity investment into the investment entity.

All of the capital for Wesco V will be used to acquire apartments in Essex’s targeted West Coast markets. These include the San Francisco Bay Area, Los Angeles, San Diego and Seattle.

Essex has also acquired the 195-unit 777 Hamilton Apartments in Menlo Park for $148 million, or $758,974 per unit. The capital source on this deal was BEX IV. This is a relationship in which the public REIT holds a 50.1 percent interest, and there is no indication which entity owns the rest of the venture. The apartment complex was built in 2017 and sits adjacent to Facebook’s global headquarters.

The final purchase was the acquisition of the 132-unit Township Apartments in Redwood City. Essex paid $88.7 million for this asset, or just over $671,969 per unit. As part of this transaction, the buyer assumed a $44.3 million mortgage with an effective interest rate of 2.9 percent and a maturity date of May 2025. The seller of this property was Nuveen. The real estate investment firm had hired Institutional Property Advisors to be the listing agent on the sale. Those involved in the sale were Salvatore Saglimbeni, Stanford Jones and Philip Saglimbeni.

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