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SAN FRANCISCO-A four-property Bay Area apartment portfolio changed hands this week for about $70 million before closing costs. Locally based Friedkin Realty Group sold three properties Walnut Creek, CA, and one in Mountain View, CA, to JB Matteson of Redwood City, CA.
All four of the properties are garden-style complexes developed in the 1960s. The portfolio totals 485 units, average vacancy is about 3%.
The Walnut Creek properties are Creekside Glen (152 units), Monticello Manor (99 units) and Carmel House (107 units). The Mountain View property is Highland Gardens (127 units). JB Matteson paid about $14 million each for the two smallest properties, about $20.4 million for the Mountain View property and about $21.4 million for the largest property. On average, the price per unit on average was about $144,500.
JB Matteson partner John Bellack tells GlobeSt.com the properties will be renovated as part of a value-add investment strategy. The renovation budget is approximately $20,000 per unit, or about $9.7 million.
Bellack says the portfolio was acquired in partnership with "an advisor to a large state pension fund." That partner is believed to be Blackrock Inc., one of the largest publicly traded investment management firms in the US. Two of Blackrock's major multifamily clients are CalPERS (California Public Employees' Retirement System) and CalSTRS (California State Teachers' Retirement System).
Arroyo & Coates partner Curtis Gardner represented Friedkin in the transaction. Gardner acknowledged the transaction, but declined further comment, referring questions to Friedkin.
Mort Friedkin tells GlobeSt.com that his company owned the properties for 17 years and will use the profits from the sale to acquire larger, more amenity-rich multifamily assets and retail properties by way of a tax-deferred (IRS 1031) exchange.
"Matteson made a very good buy; the units are extremely well located," he says. "If [Matteson] does the right type of value-add program--and I believe they will--I think they are going to find it a very rewarding process."
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