The apartment portfolio of Newport Beach-based Irvine Company—the largest owner of rental properties in Orange County and in the state—is slightly smaller after the sale of two Southern California complexes, including one in Fountain Valley.
Laguna Niguel-based apartment and mixed-use property owner and developer Raintree Partners last month completed the purchase of The Galleria, a 182-unit complex near the Fountain Valley and Santa Ana city line.
An affiliate of Raintree Partners paid a little more than $52.2 million, or nearly $287,000 per unit, for the 40-year-old complex, according to property records.
The property, near the intersection of Harbor Boulevard and Edinger Avenue, runs about 142,000 square feet, and has a mix of one- and two-bedroom units, according to CoStar Group Inc. records.
Monthly rents average about $1,500, according to the real estate data tracker’s records.
It was the second notable local purchase last year for Raintree, a privately held investor that focuses on properties in major metropolitan areas in Southern and Northern California.
In June, it paid a reported $163.5 million for Axiom Tustin, a 628-unit apartment complex near the intersection of the Santa Ana (I-5) Freeway and Red Hill Avenue.
The buy of that property, previously known as Eaves by Avalon, was the largest single-property apartment sale by total price in Orange County since 2010, according to CoStar records.
Archstone Ties
Irvine Co. had owned the Fountain Valley property since 2013, when it acquired the complex as part of a portfolio deal of apartment properties in Orange County and San Diego.
The sale represents an element of man-bites-dog with regard to Irvine Co., Orange County’s dominant real estate company. The privately held firm rarely sells commercial properties in Orange County or in any of its other markets. It has significant office and residential holdings in San Diego and Silicon Valley, as well as some high-rise holdings in Chicago and New York.
The last time Irvine Co. was reported to have given up ownership of any local commercial properties was in 2013, when it swapped a handful of offices near Fashion Island with Newport Beach-based Burnham USA.
That deal was made in part to give the company more flexibility with the development of its new 520 Newport Center office tower, which was next to some of the buildings that traded hands.
The Galleria was Irvine Co.’s only Fountain Valley apartment complex. It took over full ownership of it in 2013 from Archstone Inc., a one-time unit of New York-based Lehman Brothers Holdings Inc.
That deal—which came on undisclosed terms and totaled about 5,000 apartments in OC and San Diego—also included rental properties in local cities where Irvine Co. previously didn’t have a presence, including Aliso Viejo, Huntington Beach, Mission Viejo, Placentia, and Rancho Santa Margarita.
One other property it took over in that 2013 deal, a 264-unit complex in the San Diego County town of Escondido called Emerald Glen, also was sold recently, Irvine Co. officials said.
The name of the buyer, or the price paid for the Emerald Glen complex, was not immediately disclosed.
Irvine Co. officials said last week that two additional complexes that it bought from Archstone are projected to sell as well. The location of those two properties was not disclosed.
“While one of our principles is long-term ownership, we have, for strategic reasons, decided to sell four of those properties,” an Irvine Co. official said in a statement.
41,000 OC Units
The Galleria sale won’t take much of a dent out of Irvine Co.’s local rental portfolio, which dwarfs other apartment owners in OC and other local markets.
The real estate owner and developer had nearly 41,000 rental units in Orange County and a California portfolio totaling about 58,500 apartments as of October, according to a report by Santa Barbara-based commercial real estate data company Yardi Matrix.
The next nine largest apartment owners in OC own about 43,000 rental units here combined. Irvine-based Western National is the second largest owner in OC, with a portfolio of about 10,000 units, according to the report.
Irvine Co. is the second largest apartment owner in San Diego County, with about 7,600 units there. It’s also the fifth largest apartment owner in the San Francisco-Silicon Valley region, with nearly 8,300 units.
Irvine Co.’s total portfolio of about 58,500 apartment units in California makes it the state’s largest owner of rental units, with a portfolio about 10,000 units larger than that of Palo Alto-based Essex Property Trust, according to the Yardi Matrix report.
