Institutional investors have bought two of the three largest apartment complexes in San Clemente in separate deals valued at about $230 million combined.
In the larger of the two transactions, a Newport Beach affiliate of TA Realty LLC bought Seacrest Apartment Homes, the largest complex by unit count in Orange County’s southern-most city.
Terms of the deal were undisclosed by the buyer and seller.
Property records indicate the 368-unit complex on Avenida Vista Montana sold for about $138 million, or a little more than $374,000 per unit.
It’s the largest reported apartment sale by total price in Orange County this year.
A unit of Irvine-based Western National Group bought the complex in 2011 for about $95 million. This month’s sale represents a 45% increase in value for Seacrest, a roughly 300,000-square-foot complex in the city’s hills a few miles from the ocean. The complex’s value was assessed at about $63 million following the Great Recession.
Seacrest consists of one- and two-bedroom units with monthly rents of about $1,800 for one-bedroom units, according to data from real estate market tracker CoStar Group Inc.
The new owners plan to put an additional $9 million, if not more, into upgrading the 25-acre property, according to CBRE Group Inc. brokers.
TA Realty “plans to upgrade the interiors and common areas to appeal to the ‘renters-by-choice’ population,” said CBRE’s Dean Zander, who represented the seller along with colleagues Stewart Weston and John Montakab.
TA Realty is a Boston-based real estate investment firm that buys property on behalf of pension plans, endowments, foundations, family offices and high-net-worth individuals. Its recent local investments have included a number of area offices and other rental properties.
It’s the fifth owner of Seacrest over the last dozen years, according to Business Journal records.
CBRE brokers noted that the immediate area’s demographics “include 83% of the population having a college education, a median household income of $101,018, and a median home value of $930,000.”
The price paid “signalizes the rarity of the offering,” Weston said. “With only four properties of 100 units or greater and no new apartment developments in San Clemente, Seacrest is an irreplaceable asset.”
Avana, Also
Avana San Clemente, a 250-unit complex that ranks third among the city’s largest rental properties by unit count, was bought in October by a Newport Beach-based entity controlled by TH Real Estate, a group that buys property on behalf of New York pension fund giant TIAA.
The complex sold for $92.5 million, or $370,000 per unit, according to property records. It’s OC’s sixth-largest apartment sale of the year, according to CoStar records.
A unit of Blackstone Group sold Avana, which it acquired in 2016 as part of a $2 billion acquisition of a portfolio of rental properties.
Avana’s on an 11-acre site on Calle Del Cerro, and is about a mile from Seacrest. The complex totals about 210,328-square-feet. Rents for one-bedroom units are about $1,650 per month.
Both TH Real Estate and TA Realty are counting on Orange County’s demographics to provide strong demand for higher-end apartments, according to CBRE rental market data.
Rent growth across OC has “continued due to the shortage of available inventory, high home prices, and the influx of Millennials into the renter pool,” CBRE said in a statement.
Orange County’s population is projected to grow from 3.2 million today to 3.5 million by 2040, which is likely to continue to drive demand for apartments, according to CBRE research.
Millennials and middle-income households—those earning between 80% and 120% of area median income—will be the biggest source of apartment growth over the next decade, according to last week’s report by TH Real Estate.
Among the dozen apartment complexes in OC larger than 100 units reported to have sold this year, the per-unit pricing of the two San Clemente complexes, which were both in the $370,000 per unit range, runs roughly in the midpoint.
Pricing topped out at $444,000 per unit for the 10-year-old Stadium House midrise complex in Anaheim’s Platinum Triangle. That site was acquired in June by Irvine-based Advanced Real Estate Services Inc.
