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SAN JOSE, CA-Pacific Property Co. has added 432 apartment units to its portfolio for $96.6 million. The Palo Alto-based multifamily investor acquired the 166-unit Capitol Village and 266-unit Ellmar Oaks apartment communities here in a JV with Capmark Financial. The seller was the developer, an affiliate of locally based ABL Property Management.

The Pacific Property and Capmark plan to inject additional capital into the projects as part of a planned repositioning. The properties will be managed as one asset out of a new centralized leasing office. The two communities will also gain a single identity, Waterstone San Jose.

Pacific Property acquisitions manager Eric Schrumpf believes there are economies of scale to be had in running the two adjacent complexes as one larger community. Moreover, he believes the assets are poised for dramatic rent growth in the near term. The upside could top $200 per month per unit, he tells GlobeSt.com.”Rents at both properties have historically lagged those of the competition in the immediate submarket,” he says. “We anticipate that the planned renovation program will enable us to narrow the gap in rents relative to the newer properties in the neighborhood.”

Capitol Village was constructed in 1986 and Ellmar Oaks was constructed in 1988. The properties are located about one mile from both the VTA light rail line and the high-volume intersection of Highway 87 and Capitol Expressway. Most of the other product in the market was built in the 1990s.

Capitol Village and Ellmar Oaks feature mature landscaping and numerous water features. Individual units come with a washer and dryer, air conditioning, large balconies or patios and private garages. Common area amenities include swimming pools, spas and a fitness center. FPI Management Inc. will manage the combined properties.

The two complexes represent Pacific Property’s sixth major purchase in the Bay Area since 2005. In summer 2006, Pacific acquired the 118-unit Forest Towers in Downtown Palo Alto for $50 million.

Pacific Property Co. is a privately owned multifamily investment company with a focus on California, Washington and Washington, DC. Stan Jones and Phil Saglimbeni of Marcus and Millichap’s Palo Alto office brokered the latest transaction. TCI Properties also worked with Pacific on the transaction.

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