Orange County Business Journal

Fullerton Deals Carry Apartment Trend to North OC

REAL ESTATE: Market marches on as two deals come to $68.8M Mark Mueller Saturday, January 5, 2013
Waterton: $23.3 million for 147 units near Orange (57) Freeway

Waterton: $23.3 million for 147 units near Orange (57) Freeway

A pair of apartment complexes in Fullerton have been snapped up by investors in separate deals that come to a combined $68.8 million.

The larger of the two deals saw a unit of Palo Alto-based Essex Property Trust Inc. recently close on the purchase of the Haver Hill Apartments, a 264-unit complex about five blocks east of the Orange (57) Freeway along Yorba Linda Boulevard.

The nearly 40-year-old complex sold for a little less than $45.6 million, or about $172,000 per unit, according to CoStar Group Inc. records.

Also just trading hands was the Waterton apartment complex, a 147-unit complex near the intersection of Chapman Avenue and the Orange (57) Freeway.

San Mateo-based Acacia Capital Corp. paid a little under $23.3 million for the complex, or about $158,000 per apartment, according to brokers with the Newport Beach office of CBRE Group Inc. that worked on the Waterton sale.

Both sales rank among the top commercial real estate deals of any product type seen in Fullerton last year, with Haver Hill believed to be the largest individual apartment complex trading hands in North Orange County in 2012, according to brokerage data.

That deal adds to a string of larger acquisitions made in Orange County by Essex Property in recent years.

The apartment investor and developer, which counts a market value of about $5.4 billion, owns more than 2,000 apartments in OC, part of a nearly 33,000-apartment portfolio it has spread across California and Washington.

Its most prominent local property is Santa Ana’s Skyline at MacArthur Place, a two-tower apartment complex that has served as Orange County’s tallest residential project since its 2008 opening.

Essex and an undisclosed partner bought the complex in 2010; last year Essex bought out that partner’s 50% stake in the project for $85 million.

The company last summer paid a reported $48.3 million for The Huntington, a 276-unit low-rise complex near the Bella Terra shopping center in Huntington Beach—the second-largest apartment sale reported in the city in 2012.

Essex Property expects to see rent growth of 25% in Orange County over the next four years, company officials said last year.

A unit of Newport Beach-based apartment developer and investor Lyon Communities sold Haver Hill in a deal brokered by the local office of Holliday Fenoglio Fowler LP.

Privately held Lyon Communities, established in 1988 by General William Lyon and Frank Suryan Jr., says it has a market value of about $2 billion. It owns another 10 properties in OC and is building another complex in the South Coast Metro area called the Marke.

Acacia Capital’s $23.3 million purchase of the Waterton complex, located next to California State University, Fullerton, is the investor’s second sizable deal in that part of Fullerton in the past 18 months.

It paid $38.3 million in mid-2011 for University Crossings, a 248-apartment complex just a couple blocks away from the six-building Waterton complex.

Both Waterton and University Crossings were sold to Acacia Capital by Seattle-based Security Properties Inc., which recently put in $3 million in renovations to the just-sold complex.

“The community’s walkability to the universities, as well as ownership’s well-executed renovation, contributed to the property being ranked as one of the top three best off-campus housing options by Cal State Fullerton’s staff and students,” said CBRE Senior Vice President Ray Eldridge, who represented Security Properties in the deal along with colleagues Bob Patterson and Michelle Jefcoat.

The Waterton complex was fully leased at the time of its sale.