Irvine-based apartment investor Bascom Group LLC has made its largest ever acquisition in Orange County, picking up a 406-unit rental complex in Santa Ana.
The privately held real estate company last week said it paid $94 million for the Villas at Tustin, a nearly 13-acre property near the intersection of the Costa Mesa (55) and Garden Grove (22) freeways and the Tustin-Santa Ana city line.
The 2414 N. Tustin Ave. complex traded hands for a little more than $231,000 per unit. It was sold by a unit of Chicago-based Waterton Residential, which paid about $74.3 million for it a decade ago, according to market tracker CoStar Group Inc. records.
The deal is the most expensive apartment transaction reported in OC in about five months, according to CoStar’s data.
It’s Bascom’s 21st and most expensive multifamily property acquisition in Orange County, according to Managing Partner Jerome Fink.
The company’s prior record-setting deal here was for Tustin’s Creekside Apartments, a 628-unit complex it bought in 2003 for $74 million, according to Fink. It sold the property, now called Axiom Tustin, three years later for a reported $123 million.
Bascom has made most of its recent apartment acquisitions outside of OC. It said it’s bought $1.3 billion in multifamily properties throughout the U.S. over the past year.
Las Vegas has been a frequent source of its deal-making over that time. Last April, it was part of an investment group that paid a reported $630 million for a 4,918-unit portfolio of apartments in and around the city, making it the largest apartment owner there.
Bascom now has a national apartments portfolio approaching 25,000 units.
It also invests in other property types in the area. In October, it was part of an investment group that paid about $30 million for Tustin Commons, a 210,875-square-foot collection of office and flex buildings just south of the Santa Ana (I-5) Freeway and about a block from Jamboree Road.
The property is getting a creative-office conversion by its new owners, which operate as Harbor Associates LLC.
Upgrades Planned
Despite the high price for Villas at Tustin, Bascom executives say they think it got a deal. The property “is one of the best investment opportunities we have seen in Orange County,” said Senior Principal Chad Sanderson.
OC rental complexes have been trading for about $240,000 per unit over the past year, according to brokerage Marcus & Millichap data.
Larger complexes, though, have tended to trade well above that. Villas at Tustin had the lowest per-unit sales price of the 11 area apartment complexes larger than 200 units that have sold since early last year, CoStar data show.
New properties have been trading at nearly $400,000 a unit and more.
Sanderson said the new owners plan to modernize Villas at Tustin’s interiors and exteriors “to allow the property to compete with newly constructed Class A properties.”
The property, built in 1972, encompasses nearly 40 two-story buildings, whose mix of units average a little more than 800 square feet. Rents there are about $1,500 for one-bedroom units and $1,850 for two-bedroom units, according to CoStar data.
Sean Deasy and Ryan Fitzpatrick of HFF were the listing brokers on the sale. Bascom got a $66.5 million loan from California Bank & Trust to finance the purchase, which was arranged by HFF’s Charles Halladay and Jamie Kline.
