An apartment investor in Silicon Valley has snapped up a big rental complex in Huntington Beach, extending its acquisition push in Orange County since the start of the summer past the $130 million mark.
Saratoga Capital Inc., a San Jose-based real estate firm, late last month completed the purchase of Casa Monterrey, a 208-unit apartment complex on the corner of Warner Avenue and Edwards Street.
The property, about 2 miles from the beachfront, traded hands for a little more than $60 million, or about $290,000 per unit.
It was sold by an undisclosed family from Newport Beach whose members had owned and operated it since 1974, according to brokers who worked on the deal.
Casa Monterrey was built in 1970, and is made up of 13 two-story buildings. Its units run about 820 square feet, according to brokerage data. The complex was reported to be 97% occupied at the time of the sale.
The property has gotten $4.2 million in upgrades over the past decade but could see more work done to its interior and community areas under the new ownership, brokers said.
Big Deal
The deal is the sixth largest apartment transaction in Orange County this year by price, according to CoStar Group Inc. records.
Saratoga Capital was involved in one of the five largest deals—in June it paid a reported $76 million for the Latitude Apartments, a 262-unit complex on Santa Clara Avenue in Santa Ana.
The Casa Monterrey and Latitude deals are the first in Orange County for Saratoga Capital, a private investor that in addition to buying apartments also acts as a hard-money lender to other real estate companies, according to its website.
“They wanted to expand in Southern California—they think there’s a better opportunity here” for deal-making than in Northern California right now, said Joseph Berkson, first vice president of investments for Marcus & Millichap’s National Multi Housing Group and one of the brokers who worked on the deal.
Saratoga Capital was reported to have sold a portfolio of rental properties in downtown San Jose in August, its last reported deal in the state.
The Huntington Beach buy is the latest large rental complex to trade hands in a string of deals in OC.
There has been an increasing number of sales of area apartment complexes with more than 100 units, noted Berkson, who worked on the Casa Monterrey deal with Stewart Weston, Christopher Zorbas, Alexander Garcia Jr., David Sperling and John Montakab, all part of Marcus & Millichap’s Institutional Property Advisors division.
Huntington Beach, however, has not been part of that recent sales trend in general.
There are 31 apartment complexes in Huntington Beach with 100 or more units, and Casa Monterrey is one of only five properties of that size that have sold in the last decade, according to Berkson.
One of the other deals—for the Elan Huntington Beach complex on Beach Boulevard—is the priciest apartment sale reported in OC so far this year.
LaSalle Investment Management paid a reported $131 million for the 274-unit complex in a deal completed in July.
At $478,000 per unit, the sale of Elan—which opened last year—would be the highest price paid per unit for a large midrise apartment complex in Orange County over the past decade, according to CoStar records.
