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(Read more on the multifamily market.)

CORTE MADERA, CA-Stellar Management of New York City has acquired a 126-unit apartment complex here for $49.5 million and plans to spend $250,000 per unit to renovate and upgrade the property, which overlooks the San Francisco Bay in a location that the buyer calls “irreplaceable.” Stellar Management principal Robert Rosania tells GlobeSt.com that the company’s repositioning plan will “bring the property up to a standard that matches the market it is in,” which is one of the most affluent areas of the country.

Stellar acquired the 1960s-era property, called the Madera Vista, from Bay Area-based Braddock & Logan. Braddock & Logan is a privately held home builder that also owns an investment portfolio of multifamily and retail properties in the Western US that it has assembled over the past five years and is seeking to expand through a combination of dispositions like the Madera Vista and acquisitions of other assets.

Both the buyer and the seller were represented by Stan Jones and Phil Saglimbeni of the Palo Alto office of Marcus & Millichap. Jones and Saglimbeni tell GlobeSt.com that the buyer has acquired a property in a market where few such assets ever trade and the barriers to entry are extremely high because of a lack of development sites and the difficulty of obtaining entitlements.

According to Rosania, the location and market conditions that Jones and Saglimbeni describe present an opportunity for Stellar Management to elevate the property to the highest class A standards and reap upside from the higher rents that the repositioning will generate. Steller sees the Metropolitan San Francisco multifamily market as “the strongest rental market in the country,” Rosania notes.

Stellar’s capital improvement plans, which will also address deferred maintenance, will completely renovate the property inside and out, including upgrades to all of the units over time, Rosania says. He says that rents at the complex are below-market today, mainly because of the need for substantial capital improvements, but that Steller will also realize further upside by transforming the property to match the quality of the surrounding market.

Stellar was one of a number of prospective buyers who submitted “multiple strong bids” for the apartment complex, according to Jones. He says that the Marcus & Millichap team fielded offers from pension advisers, high-net-worth individuals and other investment groups before Stellar submitted the winning bid.

Jones says that the purchase price and Stellar’s plans reflect the “very, very strong rental market” in the Bay Area generally as well as the even stronger market in affluent communities like Corte Madera. Jones points out that with single-family homes near the Madera Vista complex selling for millions of dollars and with new multifamily development all but impossible, apartment assets there command top prices on the rare occasions when they trade.

Few multifamily properties trade in the area because “There is a limited supply, and the owners tend to be long-term holders,” Jones says. In addition to those factors, Saglimbeni points out that the demographics of Southern Marin County, one of the most affluent counties in the US, present “a repositioning opportunity that will drive a lot of rent growth.”

Rosania tells GlobeSt.com that the New York-based company plans to hold the Madera Vista for the long term, as it does with most of its investments. He describes Stellar as one of the largest apartment renovators in urban markets in the US, with $700 million of current renovations under way in New York, the San Francisco area and Washington, DC.

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