A newly built apartment complex in Huntington Beach has a new owner in a deal that appears to set a high-water mark for pricing in Orange County’s hot multifamily market.
Elan Huntington Beach, a 274-unit rental complex on Beach Boulevard that opened last year, sold last month, according to property records and real estate sources.
An affiliate of Chicago-based LaSalle Investment Management operating under the name Elan Multifamily LLC purchased the five-story property from a unit of Charleston, S.C.-based Greystar, property records show.
Terms of the sale haven’t been disclosed by the buyer or seller, neither of whom responded to requests for comment on the transaction, which has the makings of a blockbuster.
The property, based on taxes paid in the deal, appears to have sold for $131 million, or a little more than $478,000 per unit.
The per-unit price would be the highest paid for a large midrise apartment complex in Orange County over the past decade, according to CoStar Group Inc. records. (for related coverage, see Commercial Real Estate Update Special Report, starting on page 19).
The only other recently built midrise apartment building in OC reported to have sold for over $400,000 a unit was the five-story Kelvin Apartments, a 194-unit complex near John Wayne Airport in Irvine that opened in 2014 and sold last year for about $414,000 per unit, according to property records.
The average per-unit price for an apartment sale here stood at $288,000 a few months ago, according to data from brokerage Marcus & Millichap.
Astoria, a two-building high-rise complex in Irvine along the San Diego (I-405) Freeway that was converted from luxury condos to apartments after the recession, is the only large local rental complex to top Elan in per-unit price in the past 10 years, according to CoStar records. The 15-story towers traded hands in 2013 for nearly $600,000 per unit, according to property records.
The estimated per-unit price that LaSalle Investment paid for Elan is more than $150,000 higher than that commanded by any other large apartment complex in Huntington Beach that’s sold in the past five years, according to brokerage data.
Gold Star
The 372,000-square-foot Elan Huntington Beach has a number of high-end amenities and features that help justify its latest valuation.
Greystar notes that the property’s units have 9-foot ceilings, large walk-in closets, private balconies, and include gourmet kitchens with “breakfast bars, stainless-steel appliances, oversized sinks and gas cooking ranges.”
Complex amenities include a clubhouse with lounge seating, a catering kitchen for events, a fitness center, saltwater lap swimming pool, spa, and a sun deck with cabanas.
There’s also a variety of retailers along the ground floor of the property on Beach Boulevard. The complex is at the intersection of Beach and Ellis Avenue, one of the city’s busiest intersections, and a couple of miles from the beach.
“The project has a great synergy between retail and residential which includes a public plaza with seating areas, modern interiors and a variety of on-site businesses,” Jerry Brand, Greystar’s senior managing director of development, said in a statement.
Greystar, which appears to be continuing to manage the property following the sale, this month announced that Elan was awarded a Gold Nugget award for mixed-use design, one of the top industry awards for residential real estate projects.
Units range from 576 to 1,533 square feet, and monthly rents approach $2,900 for two-bedroom units and $2,300 for one-bedroom units.
Monthly rents at large OC complexes now average close to $1,900, according to data from Marcus & Millichap. That’s up nearly 5% from a year ago.
Year-over-year rent growth in Huntington Beach was 8.5% in 2015, the highest of any market in OC, according to data from the Irvine office of brokerage Moran and Co., which had the Elan listing.
Busy Month
The deal is the second big national apartment transaction that Greystar and LaSalle Investment have been involved in this year.
Greystar paid LaSalle $211.3 million for an 18-story apartment complex and a connected three-story retail building in New York City in a deal that closed in February, according to local reports.
The sale of Elan Huntington Beach also is the latest big-dollar apartment transaction in OC.
The area’s three largest multifamily deals of the year have all closed in the past month.
Laguna Niguel-based apartment and mixed-use property owner and developer Raintree Partners in July paid $241.8 million for the 628-unit Eaves by Avalon apartment complex in Tustin in the largest single-property apartment sale by total price here since 2010. The property, which was sold by an affiliate of Arlington, Va.-based Avalon Bay Communities, brought $260,000 per unit.
Also last month, Los Angeles-based investor Decron Properties Corp. bought Adagio at South Coast, a 349-unit garden-style apartment community in Santa Ana, for $96 million, or about $275,000 per unit. The property was sold by Prime Residential in San Francisco.
