Waterton Associates Sells The Parc at Prunyard for $75MM

Ellis Partners, The Pruneyard, commercial real estate news, San Francisco, Campbell, The Fortress Group, Palo Alto, North San Jose, Trader Joe's Marshalls

By Jon Peterson

Chicago-based Waterton Associates has sold the 252-unit The Parc at Pruneyard apartment complex in Campbell for $75 million (just over $297,000 per door), according to sources aware of the transaction. The property is located at 225 Union Avenue.

[contextly_sidebar id=”EVcZbGTissHa5oTiW7Zb4lav1nPsZ1em”]The buyer of the complex is a partnership with The Rockpoint Group and San Francisco-based Maximus Real Estate Partners. Rockpoint has regional offices around the country in Boston, San Francisco and Dallas. Its operation in San Francisco is located at One Bush Street.

A representative for Rockpoint stated in an e-mail that the real estate manager declined to comment. Maximus did not return phone calls seeking comment for the story.

Waterton sold the property with the assistance of its listing agent, Palo Alto-based Institutional Property Advisors, a Marcus & Millichap company.

“This property attracted a great deal of interest from a variety of institutional investors. This has to do with the specific location of the property and the market that it’s located in. Renters in this property can walk to the Pruneyard Shopping Center located nearby, which is a major retail center. The Campbell apartment market has seen rental rate growth of in excess of eight percent since year-to-year over the past 12 months,” said Sal Saglimbeni, vice president of investments with Institutional Property Advisors. He and Stan Jones, an executive director with the company, both worked on the transaction.

Waterton did make a significant profit on the sale. The real estate manager paid $53.5 million for the property in 2008. At this time the property was purchased with debt covering 65 percent of the deal. The new owners purchased the property free and clear of any debt.

The Parc at Pruneyard is a 1968 vintage property. It had occupancy in the mid 90 percent range at the time of the sale. This level of occupancy puts the property near the overall 97.1 percent occupancy for apartments in Campbell for the third quarter. This is according to data from RealFacts, a San Francisco-based apartment research firm.

Waterton sees the property as a core plus asset. “We did make some improvements to the property after we acquired it in 2008. This work included painting, improving the façade of the property and inside of the units with making the kitchen and bathrooms more modern,” said Mark Stern, senior vice president of multifamily investments for Waterton.

He does think that there is some room for additional improvements. “We took the property to a certain level, and I do think the buyers of the property will have an opportunity to take it to another level in the future,” said Stern.

Waterton had acquired The Parc at Pruneyard for its joint venture with the California State Teachers Retirement System. The name of the partnership is Waterton Residential Properties X. There was a total of $222 million of equity in the partnership with $200 million coming from the pension fund and the balance from Waterton.

With the sale of this property, Waterton owns only one apartment complex in the San Francisco Bay Area. This is the 242-unit Los Prados Apartment Homes complex located at 2205 East Leland Road in Pittsburg.

Waterton wants to buy more apartment assets in the San Francisco Bay Area in the future. “On a long-term basis we like the area to own more properties in. It’s an attractive place to own properties with the jobs in the market that are being added and that the pricing of home ownership remains very high. Our interest would be in the acquisition of value-add deals on existing apartments,” said Stern.

San Francisco-based Ellis Partners just completed the purchase of The Pruneyard mixed-use complex last week and paid close to $280 million, according to sources familiar with the transaction details. The complex has office, retail and hotel assets attached to it. The housing part offered by The Parc fits nicely with the general theme of including strong retail complexes attached to housing.

West Coast Commercial Real Estate News