Marin County’s Corte Madera Draws Apartment Investors

By Jon Peterson

Corte Madera, the tiny, affluent Marin County community, will gain 306 modern apartments with the development and redevelopment of two complexes.

Denver-based Apartment Investment and Management Co., a large multifamily property owner with interests in nearly 75,000 units nationwide, has started renovation of The Preserve at Marin on Rubin Drive with 126 units.

Diane Furst, Corte Madera mayor, said the improvements to The Preserve could not come soon enough. “This project has been empty for almost two years. There had been one person living [there] when AIMCO took it over. It has been an eyesore. We are thrilled that this company will bring an end to this situation, and we will have a new housing project for our city.”

At the same time, San Francisco-based MacFarlane Partners has begun demolition of the existing manufacturing and office buildings at 195-205 Tamal Vista Road to make way for its residential and commercial development on the 4.5-acre site. MacFarlane is now looking at a total development cost of $74 million, according to an email from George Vilkin, a managing principal with MacFarlane. This cost expectation is up from $68 million when the company first acquired the site in June 2011.

The developer is expected to complete the mixed-use project by June 2014. The construction includes 180 apartments and 3,000 square feet of local-serving commercial.

With 9,400 people, Corte Madera is a largely non-Hispanic white community in Marin County. Not quite 65 percent of its residents have earned bachelor’s degrees or higher, and its annual retail sales per capita is approaching $100,000, according to the most recent Census Bureau numbers from 2007. That compares to $12,561 in retail sales per capita in California at large. At the same time, Corte Madera residents are far more likely to own their own homes with a 68.5 percent homeownership rate in the five years from 2007 to 2011 compared to 56.7 percent in California at large.

Both projects are anomalies of sorts because Marin County can be a difficult place to gain new entitlements. The area is almost totally developed and even re-developments are hard to get approved.

AIMCO has started the $32.6 million renovation project, the cost of which is being partly funded with a loan from Newark, N.J., -based Prudential Mortgage Capital. Prudential is providing $28.34 million, according to AIMCO filings with the Securities and Exchange Commission.

Paul Geyer, a Prudential managing director in its Dallas office, said in an email that several factors led Prudential to invest. “We have had loans in this market and know how difficult it is to develop. At the time we reviewed this opportunity, the South Marin submarket consisted of approximately 7,300 units and had a vacancy of 3.2 percent. In the previous five years, only a handful of units per year had been delivered. This is probably less than 20. Given the quality of the borrower and the vision for the property, we believed this to be a very attractive opportunity,” he said.

The work on the property is projected to be complete by the third quarter of 2014. Residents will enjoy a new clubhouse, a zero-edge swimming pool, a wine bar and outdoor fire pits. “Our expectation is that the first units will be delivered to the marketplace in about six months,” said Patti Shwayder, an AIMCO senior vice president of government relations and communications. She estimated that it would be about 36 apartments.

“The Preserve is a good example of our strategy to acquire existing assets where there is a value-added play in areas where they are high barriers to entry,” she said.

AIMCO bought The Preserve in August 2011 from Boston-based Rockpoint Group and San Francisco-based Stellar Management. At that time AIMCO estimated its total investment in the property was approximately $65 million, including $40 million of 10-year, fixed-rate debt. “When Stellar was involved in the project they had attempted to get the property converted to condominiums. “This is something that AIMCO was never really interested in doing,” said Dave Bracken, town manager for Corte Madera.

AIMCO has a fairly sizeable Northern California portfolio. Through Sept. 30, the company owned eight properties with 1,411 units, two in the East Bay, one in San Jose and five in San Francisco. At the same time, its holdings are much smaller than Equity Residential and AvalonBay Communities Inc., which will own more than 10,000 Northern California units apiece after they complete the acquisition of Archstone Enterprise L.P. from Lehman Brothers Holdings.

Photo courtesy of Marin Views.

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