Newport Beach’s Irvine Company has completed its largest acquisition in several years, buying a recently built apartment complex in Orange.
Terms of the deal to buy the Archstone Gateway complex were not immediately disclosed. The deal’s believed to be worth more than $200 million, according to sources familiar with the buy.
The 884-unit complex, on State College Boulevard, runs alongside the Santa Ana (I-5) Freeway near the city line of Orange and Anaheim.
Even at a conservatively estimated sales price, the sale appears to be the county’s most expensive apartment deal of the year.
It also could end up being the priciest local commercial real estate deal of any type for the year. A recent $70 million sale of the nearby 1818 Platinum Triangle complex in Anaheim came to $266,000 per apartment. The Archstone Gateway deal would come to about $235 million on a comparable basis.
The complex is the largest residential project to go up so far in the Platinum Triangle, the industrial area around Angel Stadium of Anaheim that’s been eyed for housing, offices and retail redevelopment in recent years.
About 2,000 apartments have been built in the Platinum Triangle in the past few years— making up most of the development in the area to date.
A majority of those apartments originally were envisioned as condominiums. But many developers switched to rentals as the housing market softened.
The Archstone Gateway complex, built by Colorado developer Archstone, was one of the few projects that originally was intended as apartments.
“It’s one of the nicer projects” in North Orange County, said Jerry Giglio, vice president for the Anaheim office of brokerage Grubb & Ellis Co. “You can always tell the quality of a project by who bought it.”
Irvine Co. already has renamed the project, which opened in late 2008, simply as “Gateway.”
It’s the company’s only apartment project in Orange or Anaheim, according to Kevin Baldridge, the head of Irvine Co.’s apartment division.
Earlier Big Sale
Until Irvine Co.’s buy, the biggest apartment sale in OC this year was the $128 million purchase of the 349-unit Skyline Towers in Santa Ana by Palo Alto-based Essex Property Trust Inc. in March.
Essex paid about $367,000 per unit for the high-rise complex, which was designed as a luxury condo project.
The deal between Irvine Co. and privately held Archstone, previously known as Archstone-Smith, is the second big-dollar apartment sale for the two companies. In 2007, Irvine Co. paid an estimated $1.4 billion for a 90% stake in 16 Archstone-Smith apartment complexes in Southern California.
The Gateway project has the feel of some large apartment complexes Irvine Co. has built lately, including Costa Mesa’s The Enclave and a pair of new complexes in the Irvine Spectrum, named The Park and The Village.
What’s new for the Irvine Co. is the Platinum Triangle location of the Gateway project. The company is already touting the area’s “dynamic, metropolitan lifestyle,” according to Irvine Co. marketing materials. Monthly rents start at $1,445 for one-bedroom apartments.
Having OC’s dominant real estate company in the Platinum Triangle likely will provide a boost in an area that has seen ambitious redevelopment plans largely shelved due to the uncertain economy and housing market.
“It gives credence to the triangle,” said Giglio of Grubb & Ellis.
Irvine Co. counts more than 100 apartment complexes in its portfolio, which extends from OC to San Diego, West Los Angeles and Silicon Valley.
The deal is the first major acquisition in several years announced by Irvine Co.’s investment properties group, which oversees nearly 87 million square feet of commercial real estate across the state.
Part of Plan
The buy comes a little more than two months after Irvine Co. made changes to its executive management team, putting investment properties group President Rick Gilchrist in a new role heading up acquisitions.
The executive moves were seen by some as a prelude to a commercial real estate buying push for the company, which has stayed on the sidelines in term of acquisitions for about three years.
There are “significant acquisition opportunities that now exist in the commercial and multifamily real estate segments,” said Irvine Co. owner and Chairman Donald Bren in an August memo to senior executives announcing the changes.
More apartment deals could take place.
“We’re bullish on apartments right now,” Baldridge said.
Other Sites
Other properties Irvine Co. is said to be looking at buying include Costa Mesa’s Pacific Arts Plaza office campus, home to law firm Rutan & Tucker LLP (see related story, page 3, Real Estate column, page 28).
That project’s expected to trade hands in the $200 million to $210 million range.
A San Diego investor recently pulled out of a deal to buy the complex, leaving Irvine Co. as the front-runner for the property, according to trade reports.
