By Jon Peterson
Montreal, Canada-based Ivanhoé Cambridge has bought a majority stake in an 11-property apartment portfolio in San Francisco along with San Francisco-based Veritas Investments.[contextly_sidebar id=”i1n5Dhs2jszTU4Pmp6so1fEoImAqor4F”]“We supplied the majority of the more than $190 million of equity for this transaction,” says Sylvain Fortier, executive vice president of residential, hotels and real estate investment funds for Ivanhoé Cambridge. He declined to state the actual amount of capital the investor placed into the transaction.
The properties in the portfolio include assets located at 795 Pine, 825 Pine and 1320-1360 Lombard. The overall occupancy of the property portfolio is 98 percent. All of the properties in the portfolio are rent controlled properties.
Veritas is planning to make some improvements to the properties in the future. “When a unit becomes vacant, we will upgrade the interior of the unit and will bring the rental rates up to what the market will bear,” says Roger Snell, chief investment officer for Veritas Investments.
The characteristics of the downtown San Francisco market make it difficult for a large institutional investor like Ivanhoé Cambridge to find large properties to buy. “The makeup of the San Francisco market made it hard to find 200- to 300-unit properties to buy. This is why we have to invest in properties like we did with Veritas. In this sense, San Francisco is very similar to the apartment markets in New York City and London where the same issue occurs,” said Fortier.
There are many features of the San Francisco market that Ivanhoé Cambridge finds attractive. “These attributes include high barriers to entry, very strong supply/demand characteristics and being part of a global trend of many residents who want to work and live in downtown to be close to where the action is and restaurants are located,” said Fortier.
Ivanhoé Cambridge is also involved in some new development projects in San Francisco. The most recent example of this is the construction of 2198 Market Street, which broke ground on January 29th. This is a development that the investor is doing with Charleston, S.C.-based Greystar Real Estate Partners.
The new development will have 87 apartment units and 5,000 square feet of retail. This project should be completed during the summer of 2016.