By Jon Peterson
Beverly Hills-based Kennedy Wilson has acquired the 159-unit Village at Town Center apartment complex located at 10810 San Pablo Avenue in El Cerrito. This property was bought along with the 297-unit Big Trout Lodge in Liberty Lake, Wash.
The purchase price of the two properties was around $75.5 million. Kennedy Wilson and its partners put in approximately $26.2 million of equity and the balance was in the form of debt.
“We think that the East Bay apartment market is an attractive area to buy properties in. There is a good number of renters who are drawn to the East Bay by the fact that rents in this area are as much as 50 percent less than apartment rents in San Francisco,” says Kurt Zech, president of Kennedy Wilson’s Multifamily Management Group. He works out of the company’s regional office in San Francisco.
The location of the property was very attractive. “The complex sits in equal distance to two BART stations. This will allow the renters to either walk or ride their bike to the stations and will allow them to get to Oakland or San Francisco to work,” said Zech.
He sees that the rental growth for apartments in the East Bay is not over. “I think there will continue to be rental growth for apartments in the East Bay going forward. This will allow us to increase the value of the property that we have acquired,” said Zech.
The property in El Cerrito was acquired at a cap rate of 5 percent. This return is based on the current net operating income being produced by the property, according to Zech.
Kennedy Wilson acquired the property from Scottsdale, Ariz.-based The Wolff Company. “We owned these properties in a partnership that is winding down and that is why we sold these properties. It didn’t have anything to do with market timing,” says Fritz Wolff, chief executive officer The Wolff Company. The firm does have a regional office in Menlo Park.
Jordan Moss, a first vice president with CBRE in the San Francisco office, represented both the buyer and seller in the transaction.
Village at Town Center was built in 2006. The property was 95 percent occupied at the time of the sale. “This level of occupancy puts the property right in where the market occupancy is for the East Bay of 95 percent to 97 percent,” said Zech. The complex does have a retail component. The current tenants are a Sylvan Learning Center and an auto insurance company. There is room for one more tenant. A possible option might be something like a wine bar, according to Zech.
The East Bay is a market where Kennedy Wilson will continue to look for more properties to buy. “We are a big believer in the East Bay for apartments. We would like to find more properties to buy in that region,” says Zech.