Regency Palms, a 310-unit apartment in Huntington Beach, last month sold for $127 million in the fourth-priciest multifamily transaction in Orange County over the past year.
The seller was Chicago-based real estate investment trust Equity Residential (NYSE: EQR).
The complex at 6762 Warner Ave. was built in 1969; the $22.7 billion-valued REIT reported in its last annual report that its investment in the property was less than $28 million, as it was one of the older complexes in its portfolio.
The apartment community’s new owner is Huntington Beach-based private investor A&M Properties, according to real estate sources.
The complex, located near the intersection of Warner Avenue and Goldenwest Street, traded hands for about $410,000 a unit.
“The opportunity to acquire an asset of this size situated on 14 acres in a strong OC coastal location like Huntington Beach is extremely rare,” Brett Bayless, senior VP at The Mogharebi Group (TMG) who worked on the deal, told the Business Journal. “This was the largest OC transaction in the past year for an asset built prior to the 1980s.”
The deal is the latest example of private investors making bold acquisitions as their institutional counterparts wait on the sidelines for interest rates to let up, according to brokers.
“It’s now private investors’ time to shine in what is normally a hypercompetitive space,” TMG Senior VP Bryan LaBar told the Business Journal.
Acquisitions by private investors like A&M Properties also signal a stabilizing market, according to real estate sources.
“There will be more transactions in 2024,” said Jason Krupoff, who arranged financing for the deal. “It’s going to be a healthier market for everybody.”
LaBar, Bayless and Associate Advisor Nick Earl of TMG arranged the transaction.
A&M secured a $68.7 million fixed-rate Fannie Mae loan for the property, through Krupoff at Bellwether Enterprise.
Financing for the acquisition included five other properties, which generated cash-out proceeds that were used for the acquisition. The six-property financing deal included apartment communities in Huntington Beach, Westminster, Anaheim and Tustin.
A&M owns a dozen other multifamily properties in OC—a portfolio totaling over 1.7 million square feet.
Among those apartment communities are Springdale Villa in Westminster, Ocean Park in Huntington Beach, Idyllwillow in Mission Viejo and The Gallery in Anaheim.
The company is led by Alan Dauger, whose son Dean Dauger, also works at the company.
Regency Palms, about 2.5 miles from the ocean, was the only Huntington Beach property in Equity Residential’s portfolio prior to the sale.
The REIT, valued at $22 billion as of last week, owns or has investments in 302 properties consisting of over 80,000 apartment units, which span across New York, Seattle and Southern California.
A dozen of the company’s properties are in OC.
Those apartment communities include the Kelvin Apartments in Irvine, Villa Solana Apartments in Laguna Hills, Vista Del Lago Apartments in Mission Viejo and Avanti Apartments in Anaheim.
Equity Residential in the past three months has sold several multifamily properties along with Regency Palms.
A few of those deals include Summerset Village in Chatsworth, which IMT Residential bought for nearly $107 million; One India Apartments in Boston, which sold for $62 million; and Avenue Two Apartments in Redwood City, which Equity Residential parted with for $51 million—nearly double the amount it paid.