By Jon Peterson & Vladimir Bosanac
Aside from the industrial and life science commercial real estate markets, which over the last two years have been historically outperforming their typical growth patterns, the multifamily real estate market has been another resilient sector of the industry. Interest in apartment assets across the country, as well as along the West Coast, has been strong, which is why one of the largest institutional investors, the California Public Employees’ Retirement System (CalPERS), is allocating $821 million into the market.
CalPERS’ approval of the new commitment is to a manager that is based in the San Francisco Bay Area, the Pacific Multifamily Investors, which is managed by Palo Alto-based Pacific Urban Investors, a company with a long history of investing in multifamily assets across the Western United States.
This partnership will be looking to acquire apartment assets that will include investments up and down the West Coast from Seattle to Southern California, according to the pension fund in a board meeting document, which was reviewed by The Registry.
The investment strategy for this partnership will be to acquire existing apartments that are considered to be core vintage assets across these markets. In addition, there is a requirement that all properties need to be at least 11 years old, presumably because the value-add opportunity properties of this vintage may provide for the fund’s investment growth.
Pacific Multifamily Investors has an ending market value through the first half of 2022 at $2.8 billion, according to CalPERS. The one-year total return on the partnership was 37.1 percent.
According to The Registry’s recent reporting, Pacific Urban has been a very active player in the markets along the Pacific coast. Just in the month of October, the company has acquired three properties in the Pacific Northwest markets of Redmond and Sammamish spending nearly $265 million to acquire 638 units.
In Sammamish, the company spent $114.2 million, or $429,323 per unit, to buy the 266-unit Madison Sammamish Apartment Homes from San Francisco-based Gerson Bakar & Associates. In Redmond, the company paid $71.3 million, about $396,111 per unit, for the Gates of Redmond apartment complex and it also paid $79 million deal, or roughly $411,458 per unit, to buy the 192-unit Olde Redmond Place apartment property located. Gerson Bakar & Associates was the seller in these two instances, as well.
Earlier in the year, in Southern California Pacific Urban closed on an apartment building in Woodland Hills for $134.5 million, or about $415,123 per unit. The seller in the transaction was an entity associated with Dennis Wong of SPI Holdings. In April, acquired a 404-unit apartment building in a San Diego suburb of Oceanside for $196 million, or about $485,149 per unit. The property was sold by Apartment Income REIT.
Finally, in its home market of Northern California, the company purchased a 110-unit apartment building in Santa Clara in October for $50.7 million, or about $460,909 per unit. The seller in the transaction was Prometheus Real Estate Group. In May, the company acquired a 246-unit apartment complex in Fremont, Pathfinder Village Apartments. The company paid $127 million, or roughly $516,260 per unit, to the seller, Aimco Properties.
