Alliance Residential, a Phoenix-based apartment investor and builder with a growing pipeline of projects in Orange County, has bought a portion of the largest mixed-use development planned in Santa Ana.
An affiliate of the privately held company, which is one of the largest multifamily developers in the U.S., recently closed on the purchase of part of a 19-acre property just off Red Hill Avenue near the edge of the Tustin Legacy development.
The 2001 E. Dyer Road site today holds close to 335,000 square feet of largely unused industrial space that will soon make way for Heritage, a development of 1,221 apartment units and nearly 18,000 square feet of retail and restaurant space.
Alliance Residential paid $55 million for two of the four parcels at the site that will hold 738 apartments, plus the commercial portion of Heritage. That’s about $74,500 per apartment, excluding planned retail space.
The land was sold by an affiliate of Newport Beach-based Arrimus Capital, a developer and investor that got city approval for the project in February.
Alliance Residential plans to buy a third parcel at the site that holds entitlements for the remaining 483 apartment units, said Chris Lee, Arrimus’ managing partner. That deal could bring in an additional $37 million or so, he said.
The fourth parcel holds roughly 58,000 square feet of office and data center space that will remain for the time being and could be sold in a separate deal, Lee said.
Grand Slam
Alliance Residential’s initial purchase, which closed in March, represents the fifth time the site has traded hands since 2006, according to CoStar Group Inc. records.
Investors have included industrial property owners and potential developers that paid from $23 million to $46.5 million. The bulk of the industrial space there has been vacant for a majority of the past decade.
Arrimus Capital paid a reported $34 million for the site in late 2013 with plans for redevelopment.
The land sales for the three apartment portions are projected to ultimately exceed $90 million, so the deal should “turn out to be a grand slam for us,” Lee said.
Other investors in the 2013 deal include Ray Wirta, chief executive of Irvine-based Koll Co. who also heads the investment property division of Newport Beach-based Irvine Co. and is chairman of Los Angeles-based brokerage CBRE Group Inc.
Wirta, Lee’s father, also serves on the advisory board of Arrimus and is a frequent investor in the company’s deals.
Arrimus also invests in apartment and industrial properties in California and Texas.
Also part of the investment group that bought the development site in 2013 was Ryan Ogulnick, president of Los Angeles-based Vineyards Development, which has several other apartment projects in the works in Santa Ana.
Laguna Niguel, Too
Demolition and grading work at the Heritage project is scheduled to start in the next two months, Lee said.
The multibuilding project is close to where Santa Ana’s city line meets Irvine and Tustin and is one of the largest planned residential projects in the Irvine Business Complex area.
The project will include five-story apartment buildings totaling nearly 1 million square feet. Individual apartment units will range from 512 square feet to 1,201 square feet and consist of studios, and one- and two-bedroom units, according to city filings.
Alliance Residential has no existing apartment properties in Orange County but has nine complexes between San Diego and Los Angeles, according to its website.
The company’s local profile appears to be growing. It also owns a pair of apartment development sites just west of the Santa Ana (I-5) Freeway in Laguna Niguel.
About two years ago, it paid a reported $24.1 million for a four-building business park on Forbes Road near Crown Valley Parkway where a 351-unit luxury apartment project tentatively called Gateway Village is under construction.
In January an affiliate of Alliance Residential paid an additional $22 million for a nearby collection of buildings on Forbes Road that will see more apartment development, according to CoStar records.
