BRE Completes Exit from Capitol Market

[IMGCAP(1)]SACRAMENTO, CA-BRE Properties says it has completed a series of planned dispositions in this market. The San Francisco-based apartment REIT says it sold its last two assets in the region–Overlook at Blue Ravine and Arbor Pointe–to private investors at a composite cap rate of 8.5%, according to BRE’s recent SEC filings.

Arbor Point is a 20-building, 240-unit property built in 1987 on 20 acres at 9750 Old Placerville Rd. in Sacramento. Overlook at Blue Ravine is a 39-building, 512-unit property constructed in 1991 and 2001 on 39 acres at 1200 Creekside Dr. in nearby Folsom. Both assets were approximately 93% leased when they came to market at the beginning of the year.

[IMGCAP(2)]Overlook sold for $51 million, or $99,609 per unit, according to BRE; the buyer was David Mercer of California, according to Real Capital Analytics. Arbor Pointe was sold for $16 million or $66,666 per unit to an unidentified Bay Area-based private investor. Curtis Gardner and Mark Leary, principals in the West Coast office of Atlanta-headquartered Apartment Realty Advisors had the disposition assignment.

The 8.5% cap rate was calculated on trailing three months of property-level NOI, annualized. Over the past 24 months, the company sold eight properties, with a total of 1,756 units, in Sacramento, at a composite capitalization rate of 6.9%.

BRE Properties has been working to concentrate its portfolio in coastal, supply-constrained markets of California and Seattle. It currently owns and manages approximately 21,000 units in 70 properties in California, Arizona and Washington State. It owns joint venture interests in an additional 13 properties with a combined 4,080 units and has several projects in various stages of development.

BRE revealed its plan to exit the Sacramento some 18 months ago. It sold three Sacramento-area properties in the first half of last year at or below a 6% cap rate on trailing NOI. Despite a company announcement saying the sales complete the company’s planned exit of the Sacramento market, the company continues to own two assets here, the 400-unit Selby Ranch in Sacramento and the 236-unit Pinnacle at Galleria in Roseville.

BRE chief Constance Moore told analysts in February that she expected rents will continue to decline this year and next. “We believe we are looking at a negative rent curve for the next two years,” she said on a conference call about the fourth quarter. “All eyes are on the proposed government stimulus package. If it is successful helping to create jobs and grease the credit skids, it may soften the magnitude and duration of the pricing compression.”