Complex Nets Nearly $70M for Pacific Property

SAN DIEGO, CA-Pacific Property Co. sold the second of two properties that it acquired in Rancho Bernardo in December 2002 from Metropolitan Life Insurance Co. The 338-unit asset, known as Carmel Mountain, has netted $69.5 million (or approximately $205,621 per unit) for Pacific Property.Back in 2002, Pacific Property paid nearly $80 million combined for the 338-unit Carmel Mountain and the other Rancho Bernardo asset, Mountain Ranch Apartments. At the time, the Palo Alto-based multifamily investment firm planned to hold the assets for three to five years or longer, according to company CEO Al Pace. However, Pacific Property sold Mountain Ranch Apartments for $44.5 million to Silverstone Communities in January 2004 and has now traded Carmel Mountain to the same buyer, which plans to convert both properties into condo product. “When we take a look at Carmel Mountain’s long-term value as an apartment complex versus its current value as a potential condo conversion, the bottom line is that we’re a seller at those kinds of prices,” Price tells GlobeSt.com. Although Mountain Ranch Apartments was listed on the market, Carmel Mountain was sold in an off-market transaction. “Silverstone did approach us on an off-market basis, as did a number of other buyers, including publicly traded REITS,” Price says. “In the end, we found Silverstone’s pricing to be compelling, when compared to other alternatives,” he adds. Marc Renard of Cushman & Wakefield represented Pacific Property in the recent transaction. Located at 12087 Alta Carmel Court, Carmel Mountain was built in 1990. Its exterior is fairly contemporary, as Price points out, explaining that it is a hacienda style complex with stucco and tile roofs. The units were in need of improvements, however, and Pacific Property invested approximately $1 million in interior upgrades during its ownership of the asset. The average asking rent at Carmel Mountain was $1,115 when Pacific Property acquired the asset and rose to $1,287 at the time of the most recent sale, Price says. The complex was 91% occupied when Silverstone purchased it.