PALO ALTO, CA – Active Multifamily investor Pacific Urban Residential (PUR) is reflecting on a year of unprecedented growth. According to CEO Co-Founder Al Pace, the past year has been a busy one with new investments activity and property sales approaching $900 million dollars. “While we are watching cap rates and price per unit with some measure of caution, our team continues to identify compelling opportunities in the strongest, job centric markets in the country.
Since 1998, PUR has acquired over 22,000 West Coast apartment homes, totaling $3.5 billion dollars. Today, the well-capitalized firm and its strategic partners own an apartment portfolio in excess of $2 billion dollars.
In December 2014, PUR also signed a strategic investment agreement with the California Public Employees’ Retirement System (CalPERS), an initiative permitting the firm to acquire existing multifamily communities for long-term investment. The strategy focuses on older apartment communities. “There is nothing ‘Class B’ about older community operating performance,” states Mr. Pace. “In fact, we do not refer to the older property sector as Class B at all! Internally we coined both the strategy and the communities as Vintage communities. These are apartment communities where most of our nation’s apartment residents live and thrive. Our vintage residential communities are often better located, lower density and more transportation centric than newer, higher rent communities and offer our rental consumers a significant rent value proposition. Our communities appeal to a broader, more diversified demand base. Our residents are teachers, firemen, police officers, nurses and retailers. They are young college graduates hard-pressed to afford the latest high rent luxury community. We have invested in the sector for a very long time are delighted others have come to see the benefits and we are honored to partner with CalPERS to invest in existing vintage communities, communities that form the most important cohort of our underlying rental housing stock.”
Since formation of the strategic CalPERS venture, PUR has acquired seven communities totaling $500 million dollars and nearly 2,000 apartment homes. The venture has grown rapidly and currently has an additional $300 million of investable equity. “Our investment effort adheres to a proprietary, research disciplined approach placing considerable focus on markets with strong job growth characteristics and limited supply, while evaluating several other ‘textural’ metrics often lost in a simple ‘supply/demand’ analysis,” states Arnold Ting, PUR’s research guru. Ting has refined the proprietary strategic research PUR utilizes to select markets and guide investment decisions. The model is continuously refined, seeking to improve research output and forecasting. This research focus has led to an impressive track record over the firm’s fifteen year history, eclipsing a 17% IRR for the entirety of the PUR’s $3 billion dollar investment portfolio.
PUR is currently evaluating expansion markets but remains mum as to where their research might take them. However, it is clear PUR prefers markets with characteristics similar to the West Coast, job centric markets. Therefore, expect the East Coast to be on PUR’s radar. The firm has been meeting with strategic partners and principals to discuss its growth strategies. PUR is also harvesting; selling communities to a growing, and increasingly diverse group of buyers. Buyers include institutional sponsors, high net worth and 1031 driven exchange investors. In the calendar year, the firm placed over $400 million on the market.
Growth also brings changes and the opportunity to grow in-house colleagues while attracting new talent. PUR recently hired personnel with prior experience at Archstone, Avalon Bay, Trammell Crow and others. In addition, industry veteran and former Trammell Crow partner/multifamily developer Chris Kober recently joined the growing team as Director, augmenting the firm’s portfolio and redevelopment activities. “We are delighted to be building our team, adding to our experience, our strength and our diversity.”