NorCal Buyer's $54M Bid Wins 384 Units

The Reserve

RIVERSIDE, CA-Friedkin Realty of San Francisco has acquired two apartment complexes totaling 384 units from Chicago-based Equity Residential REIT for $53.6 million, according to Hendricks & Partners brokers Dean Zander, Vince Norris and Paul Runkle, who were the listing agents for the properties. They tell GlobeSt.com that Friedkin was one of 29 bidders on the properties, which generated 55 tours amid substantial investor interest.

The two complexes are the 208-unit View Pointe and the 176-unit Reserve at Moreno Valley Ranch. View Pointe, at 5059 Quail Run Rd. in Riverside, was built in 1998 and was approximately 99% leased at close of escrow. The complex is an institutional quality asset that lies a short distance from UC Riverside. The garden style property features a mix of one and two bedroom apartments situated on over 26 acres. It also features a large leasing center, community room, business center, fitness center with dry sauna, resort style pool and spa, and a tennis court. Unit amenities include washer/dryers, central air, large patios and storage units. The property also contained a recorded tract map for future condominium re-sales. View Pointe is located immediately adjacent to the 60/215 Freeway.

View Pointe

The Reserve at Moreno Valley Ranch is at 15100 Moreno Beach Dr., Rancho Belago, and was built in 2005. The complex, which was approximately 95% leased at close of escrow, lies adjacent to Moreno Valley Ranch Golf Course in the eastern side of Moreno Valley. The garden style complex features a mix of one, two and three bedroom apartment homes situated on over 10 acres. It also features a large leasing center, conference room and business center, fitness center, resort style pool and BBQ area. Unit amenities include washer/dryers, central air, large patios and nine-foot ceilings. Reserve at Moreno Valley Ranch is located approximately two miles south of the 60 Freeway in Moreno Valley.

Zander, Norris and Runkle note that “these sales represent two of the largest institutional sales in the Inland Empire in 2010.” Commenting on the 55 property tours that the offering generated, Norris said: “Most investors were attracted to the Inland Empire because of intense cap rate compression within the coastal and downtown areas of L.A .and Orange counties.” Zander added, “The properties were both offered free and clear of debt, which allowed the buyer to capitalize on the historically low interest rates.”

These deals were some of the last to take advantage of the positive leverage between long-term fixed debt and relatively attractive cap rates, the Hendricks & Partners team noted. "The cost on fixed rate GSE debt has risen by as much as 70 basis points since close of escrow. However, equity is still outpacing available offerings in most markets thus pricing pressure is still relatively high," they pointed out.