Irvine-based Advanced Real Estate closed out last year with the purchase of a 714-unit apartment complex in Costa Mesa for $234 million, in the largest multifamily sale in Orange County for 2023.
The transaction, which worked out to about $328,000 per unit, also marks the second-priciest multifamily sale in the state for last year, according to real estate industry data.
It’s also the biggest acquisition to date for Advanced, which owns and operates nearly 12,000 apartment units, all of which are in Southern California.
Advanced bought the property at 2855 Pinecreek Drive from Houston-based Camden Property Trust (NYSE: CPT).
The deal is Camden’s second sizeable multifamily sale in Costa Mesa for last year; it sold nearly $300 million worth of rental properties in the city in 2023.
The transaction is rare for OC due to several barriers to entry and high replacement costs for the region, Advanced CEO Rick Julian said in a statement.
Year-End Deals
The 2855 Pinecreek Drive property is one of many year-end acquisitions Advanced has made since its founding in 1981.
That’s by design, company officials said.
“We’ve found that some sellers are more motivated to close before the end of the year,” Advanced President Paul Julian—son of Rick Julian—told the Business Journal. “That can result in a better price for us and our investor partners.”
Advanced is rebranding the complex as The Grand Costa Mesa and is investing $45 million on a revamp of the property, which is across the street from Orange Coast College and about a mile from the San Diego (405) Freeway.
The renovation, which is led by Advanced’s in-house firm, R3 Construction Company, will include “resort-style” pools and spas, a dog park, barbecue and gathering areas. The company also aims to add washers and dryers to every unit.
JLL represented both Advanced and Camden in the deal.
The commercial real estate brokerage firm helped Advanced secure a $150.8 million Freddie Mac loan at a fixed interest rate of 5.95% for 10 years.
Brokers involved in the deal included Blake Rogers, Ryan Fitzpatrick, Chelsea Jervis, C.J. Angle, Carter Jones and Audrey Souders.
$114M Investment
Camden made a substantial profit on The Grand’s latest sale, according to regulatory filings.
The company previously invested $114 million into the property, which was built roughly three decades ago.
The complex, formerly named Camden Martinique, was the company’s third smallest by average apartment size; units at The Grand run around 795 square feet.
Rents per unit at The Grand averaged $2,150 per month, according to Camden’s last annual report.
The average occupancy for the property totaled 97.2% in 2022, regulatory filings indicate.
The median occupancy among Camden’s portfolio of about 170 properties was 96.4% that same year.
Second Costa Mesa Sale
The Grand is the larger of the two sales Camden made last year in Costa Mesa. Both deals were made with local investors.
The $10 billion-valued real estate investment trust last June sold a 138-unit complex in Westside Costa Mesa for $61 million to Newport Beach’s MIG Real Estate LLC, the real estate investment offshoot of the Merage family office.
MIG paid about $422,000 per unit for the property, dubbed Newport Palms, located at 1850 Whittier Ave.
The trade at the time was the largest multifamily investment for Costa Mesa in over a year and the second priciest multifamily transaction for OC in 2023, according to brokerage data.
Camden Parkside
This isn’t the first time Advanced has purchased property from Camden.
The apartment investor bought a 421-unit multifamily complex in Fullerton—called Camden Parkside—from the company for $99 million in 2016.
The property, like The Grand, is also walking distance from a college—California State University, Fullerton.
The deal at the time was one of the largest local property trades that year.
Active Year
The Grand deal, combined with Advanced’s other 2023 acquisitions, made the company the most active multifamily buyer in SoCal last year, according to officials.
“We feel the timing was great as the competition thinned out with the high interest rates when we went under contract,” Paul Julian said.
“Rates have since dropped a bit allowing us to lock in an accretive loan,” he added. “If the rates continue to drop, it is possible some of the pent-up capital on the sidelines may jump in later this year.”
In what Julian describes as a slower year for the commercial real estate market, Advanced acquired three multifamily properties last year, two of which are in OC.
Advanced in September bought Surf House Apartments in Huntington Beach for $96 million.
The company aims to spend $7 million to renovate the 264-unit apartment community, formerly known as Citron House. Advanced financed that deal through a $53 million Freddie Mac loan.
The company’s remaining 2023 acquisition was The Edison in Long Beach. Advanced in April paid $58 million for the 12-story former high-rise office building, which was converted into 156 luxury apartments in 2016.
