Two San Mateo-based apartment investors have swapped ownership of a big rental complex in Mission Viejo: 230-unit Madrid on Los Alisos Boulevard, just south of the 241 Toll Road.
The 17-year-old complex sold in late August, property records show. It went for $83 million, or $361,000 per unit, according to a recent investor presentation by seller Essex Property Trust.
An affiliate of Northern California’s Acacia Capital Corp. bought it.
It’s Acacia Capital’s first known Orange County investment in several years. The company is unrelated to Newport Beach-based patent litigation and investment firm Acacia Research Corp.
Its last big reported deal here was about three years ago when it bought a complex near California State University-Fullerton, one of several rental properties it has in the area.
The real estate investor has bought more than 20,000 apartments since it was established, according to its website. It also invests in residential land deals and has helped homebuilders finance more than 40,000 lots.
Essex Property Trust still owns nearly 7,000 apartments in OC, or nearly 11% of the West Coast apartment owner’s net operating income. It’s the area’s third-biggest rental owner here after Irvine Co., which has nearly 40,000 units in OC, and Irvine-based Western National Group, with about 10,000 units here, according to industry data.
Its two-building, 25-story Essex Skyline property in the South Coast Metro area of Santa Ana is likely its best-known property here. The company in an investor presentation this month cited the tallest residential property in OC as one of its shrewder investments; it bought the broken condo project in 2010 for about $128 million, well under its likely value today.
Company executives have been sounding alarm bells over the area’s economic fortunes during Essex’ latest earnings call, suggesting other sales here are possible.
Besides the Mission Viejo property, it has reported selling only one other Southern California property, in Los Angeles, in the past year.
In OC, “job growth continues to show signs of weakness with 0.7% year-over-year growth for the second quarter of 2017,” which lagged nationwide job growth, Senior Executive Vice President of Asset Management John Burkart told analysts in July.
Essex’ data show that the 6,550 apartments being added in OC this year will grow the area’s rental property base about 1.6% but that jobs are projected to grow about 1% this year.
The company was still able to increase rents 5.2% year-over-year as of June 30 in South OC and 4.6% in North OC, “despite the weak job growth” and “supply demand imbalance” in the area, Burkart said in July.
OC rental rates will grow 3.5% this year, according to economic projections Essex cited.
“We are watching Orange County closely” in terms of rental performance due to the job growth issues and supply-demand issues, Burkart said.
Chicago Tower
Newport Beach-based Pacific Life Insurance Co. is going back to the Windy City for another high-rise apartment investment.
The firm, known more for its insurance and investments products, was part of a venture that bought a 28-story, 305-unit luxury rental property this month at 1333 S. Wabash Ave. in the South Loop area.
The tower was bought for $125 million in a venture with Chicago-based residential property owner Habitat and L.A.-based private equity firm Township Capital, or $410,000 a unit. The purchase was financed with a $79.2 million loan from PNC Bank, according to Crain’s Chicago Business, which first reported the deal. The tower was sold by Chicago-based CMK, according to Crain’s.
PacLife is no stranger to residential tower investments in Chicago. Over the past decade, it teamed with Chicago-based developer Fifield Cos. to build high-end apartment complexes in the city’s West Loop. One, Alta at K Station, sold for nearly $300 million in 2012 in one of the biggest residential deals in Chicago in several years.
