Chu notes that the sales closed at an approximate 7.5% cap rate compared to the lower cap rates in the 5% to 6% range that prevailed in the market two years ago. "This reflects the improved returns these properties will generate at the lower prices and with today's better interest rates for this product type," he says.

John Adair, principal with Prime Group, notes that Northwestern and Cushman & Wakefield worked to finish due diligence in only two weeks and close the deals a little more than two weeks later. "Even though the current economy is challenging, we believe in the long-term strength of the multifamily business in California and hope to make more investments like this in 2009," Adair says.

The Villages of Monterey was built in 1988 on a 42-acre site with 10 units per acre. In addition to 28 residential buildings, there is a management office and a clubhouse with fitness center and dry sauna. The apartments range from one to three bedrooms and from 728 square feet to 964 square feet.

Montecito Village was built in 1989 on an 11.6-acre site. The gated community's 18 residential buildings offer upgraded one- and two-bedroom apartments that range from 642 square feet to 1,055 square feet.

The acquisitions are the most recent in a wave of investment activity by The Prime Group. In December 2008, the company acquired the 560-unit Blue Rock Village complex in Vallejo, CA from BRE Properties for $54.4 million. The Prime Group now owns a multifamily portfolio totaling 20,000 units in 42 properties throughout California, Nevada, Arizona, New Mexico, Oregon and Colorado.

Instant Insights /

$84M Prime Group Buys Underscore Trend

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