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Gerrity Lists Brea, Mission Viejo Retail Centers for Sale

Shopping centers in Mission Viejo and Brea are part of a portfolio of West Coast retail properties that are on the block and could sell for nearly $500 million.

San Diego-based Gerrity Group LLC, a privately held retail property investor, recently listed for sale a 14-property portfolio of retail centers in California, Washington, and Oregon that total about 1.6 million square feet.

Cushman & Wakefield Inc. has the listing for the properties, which are largely anchored by grocery stores and are about 89% leased. A time frame for a sale being completed has not been disclosed.

Two Orange County properties are part of the portfolio. They include Gateway Center, a nine-building retail center along Alicia Parkway in Mission Viejo that totals about 79,000 square feet.

Gerrity Group paid a reported $28.6 million in mid-2013 for the center.

Brea Center, a 57,000-square-foot center at the intersection of Brea and State College boulevards, is also part of the listing. Gerrity Group paid $14.5 million for the Vons-anchored property in 2011.

Garden Grove Sales

Irvine-based Brandywine Homes has sold off a second apartment complex in Garden Grove that it recently built.

The homebuilder, which began moving into the apartment development business last year, recently sold its Waterstone Apartments complex. The 25-unit development is near Dale Street and Stanford Avenue, about half a mile north of the Garden Grove (22) Freeway.

A Santa Monica-based investor paid $8 million, or about $320,000 a unit, for the complex, according to CoStar Group Inc. records. Morgan Skenderian Investment Real Estate Group brokered the deal for Brandywine.

Waterstone has a mix of two- and three-bedroom apartments that range from 900 to 1,360 square feet. The project opened for leasing in January and is fully leased.

The deal came about three months after Brandywine sold its Cobblestone Apartments, a 34-unit complex in Garden Grove near Hope Street and Westminster Avenue that also opened in the past year.

That complex is reported to have sold for just under $11 million, or about $322,000 per apartment.

Steadfast Strategy

A nontraded real estate investment trust run by Irvine-based Steadfast Cos. is exploring the potential sale of its sizable apartment portfolio at an earlier-than-expected date.

The company’s Steadfast Income REIT Inc., a nontraded REIT that was launched in 2010 and has subsequently bought 65 apartment communities, said in October that it hired Goldman Sachs as a financial adviser to help it “evaluate its strategic options.”

The REIT’s board of directors “is committed to maximizing the total potential return to stockholders,” said Steadfast Chief Executive Rodney Emery. “We believe that with current market conditions, coupled with the size and composition of our apartment

portfolio, the company may be advantageously positioned to execute on a liquidity opportunity for our stockholders in the near future.”

The investment trust’s portfolio totals nearly 16,500 apartments, which are based in 11 Midwestern and Southern states.

The properties were bought for about $1.6 billion, or roughly $97,000 per apartment.

The portfolio is now more than 95% leased, according to regulatory filings. Rents average about $938 per month at the complexes in the portfolio.

The REIT raised about $745 million from investors, which it used to purchase the properties. It initially expected it would embark on a liquidity event―be it a sale, listing of shares, or liquidation―by 2016, but the still-strong market for apartment sales appears to be pushing the company to consider an earlier exit.

A separate nontraded REIT run by Steadfast that also invests in rental properties, called Steadfast Apartment REIT, has raised about $72 million since launching about 10 months ago.

Last month that REIT announced it was paying $98.5 million to buy a 696-unit complex near Atlanta, bringing its portfolio up to about 1,740 apartments in four states.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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