By Jon Peterson
Palo Alto-based Pacific Urban Residential has paid $8.6 million to acquire the 84-unit Vista Del Lago apartment complex in Concord located at 1841 Laguna Street.
“This work will take place over the next 15 months. It’s something that we believe needs to be done to bring the property up to speed. The property is B quality now. This is an investment opportunity that we feel very strongly about and is a good example of our investment strategy, which is to buy B quality properties and improve them with a capital infusion,” says Al Pace, president and chief executive officer of Pacific Urban.
The buyer acquired the property in an all-cash transaction. Pacific Urban bought the complex for its own account. This was not a cap rate deal because of the deferred maintenance work that needed to be done to the complex.
The asset was sold by a private buyer who had the sales listing with Cornish & Carey Commercial Newmark Knight Frank in its Emeryville office. The work on the transaction was led by Richard Knutson, senior vice president and Anthony Pappageorge, senior associate.
“The previous owner of the property had controlled it for 15 years. The complex was built in the late 1960s to early 1970s. Occupancy at the time of the closing of the sale was 90 percent. This puts it a little lower than the overall market occupancy for apartments in Concord of 96 percent to 97 percent. The re-positioning planned by the buyer should allow the new owner to add some value to the asset in the future,” says Knutson.
The Concord apartment market is one that has seen rents improve over the past 12 months. “Rents on one-bedroom units are up 7.2 percent and 4 percent for two-bedroom units over the past year. The main driver for this has been very limited, if any, new construction. There are now some new projects being talked about for the future,” says Pappageorge.
The apartment market in Concord totals 37 buildings and 4,300 units.
Pacific Urban is planning to be an active buyer going forward. In the San Francisco Bay Area, the company is getting close to buying more apartments in Redwood City and Sunnyvale. It’s also looking at acquiring assets in Southern California and Seattle.
The company has a business plan to find a joint venture institutional capital partner that would allow the capital source to fund its future acquisition efforts. Earlier this year it hired Tricia Peterson as a director of capital markets to assist the company in finding an equity partner.
Pacific Urban has done work with many institutional real estate managers. The company’s executives have previous investment experience in dealing with major institutional investors including the California Public Employees Retirement System.
According to its Web site, Pacific Urban has acquired and executed asset strategies on over 100 apartment complexes. It has repositioned communities for almost 17,000 residents on the West Coast.
Photo courtesy of cowellhistoricalsociety.org