Essex Buys Partner's 80% Interest in Two Assets

PALO ALTO, CA-Essex Property Trust Inc. has paid AEW Capital Management $74.6 million to raise its interest in two California apartment properties to 100% from 20%. The purchase ends a joint venture relationship between the two companies that started in late 1999.The properties involved are Tierra Vista, a 404-unit complex in Oxnard, and the Pointe at Cupertino, a 116-unit apartment complex in Cupertino. As part of the transaction, Essex assumed $51.4 million in debt–a $37.3-million loan with an interest rate of 5.93% that matures on July 1, 2007 for Tierra Vista, and a $14.1-million loan with an interest rate of 4.86% that matures on Nov. 1, 2012 for the Pointe at Cupertino. In late 1999, Essex formed a joint venture with AEW Capital Management on behalf of one of AEW’s Institutional clients. Essex contributed three operating properties and one entitled land parcel that the JV developed. In April 2002, the JV sold two of the properties–Casa Mango, a 96-unit apartment community located in Del Mar, and Riverfront Apartments, a 229-unit apartment community located in San Diego–for a combined sale price of approximately $52 million. The value of the properties when they were contributed to the joint venture was $41 million, according to Essex, which says it received not only a pro rata interest in the gain but also incentive and other fees.The Pointe at Cupertino and Tierra Vista, which was built on the entitled land parcel, were the remaining properties in that joint venture. Essex CFO Michael Schall could be reached Monday for comment on the financial success of the latest transaction and the reason for the purchase of the venture’s two final assets as opposed to their sale.