A major multifamily property has sold in one of California's largest apartment deals of the past year, and one that shows continued demand in areas where it's harder to build new supply.
Multifamily owner and operator Advanced Real Estate, based in Irvine, California, bought the 714-unit The Grand Costa Mesa at 2855 Pinecreek Drive in the Southern California city of Costa Mesa, according to a statement from the buyer. The seller was an entity related to Houston-based apartment giant Camden Property Trust. A Camden representative did not immediately respond to a phone call for comment from CoStar News.
The sales price was roughly $234 million, or about $327,730 per unit, according to a representative for the buyer. That's below the Costa Mesa average of $448,000 per unit, according to CoStar data.
The deal is among the largest apartment sales in the Golden State this year in terms of number of units. It points to investors' willingness to spend to upgrade complexes at a time when building new apartments can be pricey.
“Very few large properties trade in Orange County, especially in a premier location like Costa Mesa,” Advanced CEO Rick Julian said in the statement. “The barriers to entry and replacement costs are so high, an asset like this can’t be duplicated at this basis, even with the extensive capital proposed for renovations.”
Major Upgrades Planned
As part of the deal, Advanced secured a $150.8 million Freddie Mac loan at a fixed interest-rate of 5.95% for 10 years with full-term, interest-only payments, according to the statement.
Advanced plans to spend $45 million in upgrading the property's pools, spas, clubhouse and dog park, according to the statement. In addition, washers and dryers are expected to be added to all the units, and apartment interiors are being planned to be modernized.
The deal adds to Advanced's roughly 12,000-unit apartment portfolio valued at more than $4 billion, according to the statement. The company also bought apartment properties in Long Beach and Huntington Beach, California, this year.
The Costa Mesa apartment market has an average monthly rent of $2,556, below the Orange County average of $2,643, according to CoStar data. The market vacancy is 3.7% which is on par with the Orange County average.
For the Record
JLL represented the seller in the deal and represented Advanced in securing the loan. JLL's Blake Rogers, Ryan Fitzpatrick, Chelsea Jervis, CJ Angle, Carter Jones, Audrey Souders were involved in the deal along with Kevin MacKenzie, Greg Brown, Charlie Vorsheck and Kyle White.