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ESCONDIDO, CA-Denver-based Aimco has acquired a 118-unit garden-style apartment complex called the Acres from San Diego-based MG Properties for $19.3 million in a transaction brokered by the Costa Mesa office of Chicago-based Moran & Co. Tom Moran Jr., who represented the seller, says that the complex comes with substantial development potential, with condo units already approved for the site.

Moran explains that the Acres, which is at 1575 Tanglewood Lane, is situated on a 13.8-acre site that is built out to a very low density at 8.6 units per acre. Moran points out that the density is well below that of most multifamily developments.

“Traditional garden-style apartments offer 20 units per acre. If Aimco decides to take advantage of this development opportunity, the property would remain at half the density of traditional garden-style apartments, while still keeping abundant open space and recreational amenities,” Moran comments.

According to Moran, the property’s substantial value-add opportunity and the area’s strong job and population growth attracted all types of buyers. In addition, 40 new condominium units have been approved for development on the property.

Moran also points out that the property offers a significant short-term value-creation opportunity through renovations. Aimco has just such a program going currently at Hidden Cove, a 334-unit apartment complex next door to the Acres.

The purchase of the Acres will enable Aimco to realize operating efficiencies by expanding the existing rehabilitation program and combining the two properties to operate as one. Longer term, there is the opportunity to build the additional 40 units, which would require converting the property into a for-sale condominium project.

Justin Smith, vice president for MG Properties, observes that San Diego County has a record of strong job and population growth, which “has created a rapidly increasing demand for housing in a market with an inadequate supply.” MG Properties recognized this growth and increased the value of the property by getting the additional units approved, Smith notes.

Smith adds that the importance of the Acres location has grown as high-end commercial enclaves such as UTC in La Jolla have approached full build-out. This has caused a large number of employers to relocate their corporate campuses along the I-15 Corridor.

In addition, Smith points out, the corridor now includes approximately 25 million sf of office and industrial space, including the Rancho Bernardo Industrial Park, South Poway Business Park, 4S Ranch Industrial Park and Carmel Mountain Ranch Business Park. These business parks have attracted and continue to attract large employers such as Sony, Northropp Grumann, Hewlett Packard, SAIC, Nokia, TRW, General Dynamics and Siemans.

Built in 1986, the Acres is approximately one mile from the intersection of Interstate 15 and Highway 78, which is the primary route to jobs and recreation in nearby Rancho Bernardo and Carlsbad. The complex is designed so that every apartment is a corner unit. Its 118 apartments include 30 one-bedroom, one-bath units at 750 sf and 88 two-bedroom, two-bath units measuring 980 sf. The proposed 40 additional units would average 1,228 sf.

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