By Jon Peterson
Los Angeles-based KF Properties has acquired the 194-unit Creekside Gardens apartment complex in Vacaville for $43.3 million, or nearly $223,196 per unit, as stated by sources familiar with the transaction.
The seller of the property was Concord-based JCM Properties. This firm was represented in the transaction by Jason Parr, a senior director with Cushman & Wakefield in its Apartment Advisory Group in San Francisco.
“This property did attract a strong investor response. We received a total of 14 offers with the makeup of these firms being a mixture of institutional capital, high-net worth sources and private equity real estate groups,” said Parr.
The cap rate on the sale was 5 percent, as stated by sources aware of the sale. This return is based on the property’s current net operating income.
Creekside Gardens is located at 300 Bel Air Drive, and it was developed in 1977. At the time of the sale, the complex was 97 percent occupied.
One of the main attractions to the property was the potential to increase rents once a full renovation of the property has been completed. A comprehensive renovation to the property has never been done to date. Rent premiums in excess of $240 per unit are projected through interior and exterior upgrades.
The cost of the renovation is projected to be around $15,000 per unit, or around $3 million. The interior upgrades could include the installation of in-unit washer/dryers, repainting, upgraded kitchen countertops, new kitchen appliances and light fixtures. Improvements on the outside will include expanding the fitness center, repainting, planting drought-resistant landscaping and upgrading the swimming pool deck with outdoor furniture.
The Vacaville apartment market is one that has limited development planned for the future. Part of this is the rising construction costs for both materials and labor. Another factor is a lack of available land for future development opportunities.