An estimated $87.5 million sale of an apartment complex in Huntington Beach is the latest indicator that the city’s multifamily market remains hot.
An affiliate of Beverly Hills-based real estate investor Domino Realty last month completed the purchase of Artisan, a 277-unit rental complex totaling about 269,000 square feet a few blocks from the Bella Terra shopping center.
The property is at 15555 Huntington Village Lane, less than a block from the San Diego (405) Freeway. It was built in 1977, and its apartments average about 992 square feet.
The property sold for an estimated $316,000 per unit, according to market tracker CoStar Group Inc.
It’s the only acquisition reported in Orange County over the past year for Domino Realty, which owns other commercial buildings in Huntington Beach.
Its largest local asset is the Terraces apartments, a 441-unit complex next to the Outlets at Orange shopping center, according to CoStar records.
The company’s purchase of Artisan closed in mid-December and was the fourth largest sale of an individual apartment complex in Orange County in 2015, according to CoStar records.
The reported price of the deal makes it a big money maker for the seller, real estate investor Kennedy Wilson, which also is based in Beverly Hills. An affiliate of Kennedy Wilson paid about $67.5 million, or $244,000 per unit, in mid-2012.
The company said at the time of the 2012 deal that it planned to put an additional $3.5 million into the complex, which previously was known as Via Verde.
The latest sale represents a nearly 30% increase in price for the 12-building complex, which features a mix of one- and two-bedroom apartments.
Artisan was one of two big Kennedy Wilson commercial property flips in OC in 2015. In July, it sold Stadium Gateway, a six-story, 273,000-square-foot office next to Angel Stadium of Anaheim, to the local office of Dallas-based Lincoln Property Co.
The property sold for about $68 million in one of the largest office deals in Central Orange County last year.
Kennedy Wilson bought Stadium Gateway for $56 million in 2012 when the office was about 30% vacant. It was 98% leased at the time of its sale to Lincoln Property.
Per-Unit Prices
The estimated $316,000 per unit sales price for Artisan is on the high side compared to other older apartment complexes that have recently traded hands in the area.
There hasn’t been a stand-alone apartment sale in Huntington Beach to top the $300,000 per unit price in the past five years among deals topping $20 million, according to CoStar data.
The average per-unit sales price for a rental complex in OC stood at about $285,000 at the end of the third quarter, according to data from the national multihousing group Marcus & Millichap. That’s a 4.9% year-over-year increase, according to the brokerage’s data.
The price increases are a result of shrinking vacancy rates and rising rents. OC’s apartment market is at its tightest level in nine years, with an occupancy rate of about 97%, according to Marcus & Millichap.
Average monthly rents here now top $1,800, up more than 5% year-over-year, and similar gains are expected this year, according to brokerage data.
2015 Toppers
The most expensive reported sale of a large OC apartment complex last year on a per-unit basis was Modera Apartments, a 194-unit complex that opened in Irvine in 2014.
The property was bought by Chicago-based Equity Residential for an estimated $80.4 million, or $414,000 a unit, according to CoStar data.
The biggest stand-alone apartment sale on a total dollar basis last year was Madison Park, a 768-unit complex in Anaheim that traded hands for an estimated $122 million, or $158,000 per unit. It was bought by a venture between MG Properties and Intercontinental Real Estate Corp.
