Apartment owner BRE Properties Inc. plans to put nearly 7.5 acres of land in Anaheim’s Platinum Triangle on the market for sale, in one of the first recent examples of a national developer opting to pass on building more apartments on land it owns in Orange County.
The San Francisco-based company, a real estate investment trust that owns 11 apartment complexes in OC, recently said that it had decided to sell two parcels of land it owns along Katella Avenue, a few blocks from Angel Stadium.
The empty lots are next to the 320-unit Park Viridian apartment complex owned by BRE.
The company built the Park Viridian complex in 2009, at a reported cost of $89 million. The complex is close to being fully leased, according to regulatory filings.
The 7.5-acre site could hold an additional 400 apartments and is among the larger undeveloped residential projects approved for construction in the Platinum Triangle, which has seen nearly 2,000 apartment and condominium units built over the past five or so years.
Possible Price Tag
A time frame for the proposed sale has not been disclosed. BRE officials believe the land is worth about $23.1 million, assuming another residential developer would buy both lots.
That price works out to about $3.1 million an acre, or a little less than $58,000 per planned apartment.
BRE paid $5.1 million for a 4.4-acre portion of the land last year, according to filings with the Securities and Exchange Commission.
The developer’s move to sell off the Anaheim land comes as a host of national and local developers continue to move to buy land and break ground at upscale rental projects across OC.
Last week, for example, the Tustin City Council approved a previously announced deal with Newport Beach-based Irvine Co. to transfer land at the Tustin Legacy development for a 533-unit apartment project.
Irvine Co. is paying about $30.1 million for the 20-acre site in Tustin, and will pay an additional $15.3 million in infrastructure fees for the project, according to city records.
Projects in the works—including a number of large complexes going up in Irvine as well as a few in Huntington Beach—are expected to add about 1% to the area’s class A apartment inventory in 2012 and 2013, according to brokerage data.
That level of development shouldn’t have too much effect on apartment rents, which are projected to rise close to 5% this year and next, according to a number of market reports.
Slowdown?
There are some signs of a potential slowdown in development going forward in OC, particularly among large, nationally focused apartment builders, according Tom Reimers, California division president for land brokerage Land Advisors Organization.
“Apartment guys are still looking around, but as the pipeline swelled up—[especially] in areas like the [Irvine Business Center] and Platinum Triangle—there’s been a lot more caution,” Reimers said.
BRE said its decision to sell the Anaheim land was made to reduce the overall size of the company’s development pipeline, which is now forecast at about $870 million. None of its upcoming development projects are in OC.
“We can take advantage of this market opportunity (to sell properties like the Anaheim land) because entitled sites today are at a premium,” BRE Chief Executive Constance Moore told analysts during the company’s latest quarterly earnings call.
OC Portfolio
BRE owns close to 3,300 apartments in OC, with properties in Orange, San Clemente, Costa Mesa and Santa Ana, among other locations. The properties were more than 95% leased at the end of September.
BRE officials noted during their third-quarter conference call that its OC portfolio includes “some older, slower growth assets” that it anticipates selling during the next few years.
Its OC portfolio was valued at a little more than $600 million at the end of last year, according to BRE’s regulatory filings.
