A spate of apartment development going up on Jamboree Road in Irvine doesn’t appear to be scaring off investors looking for existing complexes in the same area.
The Charter Apartments, a 403-unit complex about a mile from John Wayne Airport, was recently purchased by an affiliate of Palo Alto-based Pacific Urban Residential, an apartment investor backed by the California Public Employees’ Retirement System.
Terms of the sale, which property records show closed about a month ago, were not immediately disclosed.
The deal looks to have the makings of a blockbuster.
$112M
Sources familiar with the transaction put the Charter’s sale at a little more than $112 million, or roughly $280,000 per apartment. The complex, at 2750 Kelvin Ave., is about a block from the intersection of Main Street and Jamboree Road.
That per-apartment price is about 65% above the average Orange County apartment sale last year, according to data from Marcus & Millichap.
The estimated price of $112 million would make the deal the most expensive single-property apartment sale in Orange County since late 2013, according to brokerage data.
Irvine-based Western National Group sold the complex, which it acquired in 2010. The building was valued at about $85 million, or $211,000 per apartment, at the time of that transaction, according to property records.
Pacific Urban Residential has rebranded its recently acquired property as Sofi Irvine.
The project is the second sizable Orange County apartment purchase for Pacific Urban in less than a year.
The company paid about $88 million for Prado at Laguna Hills last March. The 360-unit apartment complex is near the Laguna Hills Mall and now operates under the Sofi Laguna Hills name.
The Laguna Hills purchase was the priciest apartment transaction in OC in 2014, according to CoStar Group Inc. records.
In early 2014, Pacific Urban announced a partnership with CalPers, the country’s largest public pension fund, to buy class B apartment properties in the U.S.
The multiyear investment program, called Pacific Multifamily Investors, was funded with an initial allocation of $200 million.
The Irvine and Laguna Hills properties were acquired by affiliates of Pacific Multifamily Investors, according to property records.
Pacific Urban officials declined to comment on the purchase, citing confidentiality agreements. Western National officials did not return calls for comment on the latest transaction.
Sofi Irvine was built in 1988 and got a nearly $7 million renovation about nine years ago. The three-story complex is about 300,000 square feet and sits on about 9 acres.
The Irvine property is one of the older apartment complexes located on a stretch of Jamboree Road that’s seen a bevy of multifamily construction of late.
More than 1,000 apartments are under construction within a few blocks of Sofi Irvine to go along with a few thousand more that have already been built over the past decade.
Notable projects now under way include 2801 Kelvin, a 381-unit complex going up on Jamboree Road across from Sofi Irvine. That project is being headed by UDR Inc., a Highlands Ranch, Colo.-based developer.
UDR put an estimated $125 million price tag on the project late last year. The $328,000 per apartment average is about 17% more than Sofi Irvine, based on the latter project’s estimated sale price.
The 2801 Kelvin project is a joint venture between UDR and New York-based insurer MetLife Inc. It’s expected to be finished in early 2017.
Other multifamily projects that could move ahead soon include Main & Jamboree Apartments, a 388-unit project proposed for a site across the street from the Jamboree Center office complex. It would go up where a handful of older offices and warehouses are now located.
Irvine-based Sanderson J. Ray Corp. currently heads up that proposed project.
IBC Development
The area around Sofi Irvine is one of the biggest sources of new apartment development in the Irvine Business Complex, the 2,800-acre, largely commercial area near John Wayne Airport.
The IBC is currently home to about 6,850 apartments. Another 2,055 apartments were under construction in the area as of last month, and an additional 4,600 residences were approved but not under construction, according to city records.
Five more IBC projects totaling about 588 apartments were in the pre-application phase as of last month.
The city enacted a 15,000-unit cap on residential development for the IBC in 2010, which leaves only a few more sites available for potential construction.
The dwindling number of available entitlements in the IBC and projections of rent growth should be driving up prices in OC this year, according to brokerage data.
Apartment rent growth in the county is expected to increase 5.3% this year to $1,820 per month, according to a recent forecast from the multihousing group of Marcus & Millichap.
That would be the first year since the last recession that rent increases have topped 5%; rents climbed 3.8% in 2014, according to the forecast.
