SAN DIEGO—TruAmerica Multifamily and joint venture partner Investcorp have acquired the 456-unit Waterleaf Apartments in the North San Diego County suburb of Vista in an off-market transaction valued at $86.2 million. The seller of the property was RedHill Realty Investors and AEW Capital Management.
With the acquisition of Waterleaf, TruAmerica has been involved in two of the largest multifamily transactions recorded in supply-constrained San Diego County in the past 18 months. TruAmerica also advised on the $81 million October 2013 acquisition of Plaza D'Oro, a 221-unit class A apartment community in Oceanside, as GlobeSt.com previously reported.
Since being founded in July 2013 as a joint venture between industry veteran Robert Hart and The Guardian Life Insurance Company of America, TruAmerica has quickly built a new acquisition portfolio of 4,900 units valued at over $1 billion boosting its Western US management portfolio to 13,000 units.
“While the previous owners were good stewards of the property, Waterleaf remains an excellent value-add opportunity in a market with strong multifamily fundamentals,” says TruAmerica's senior managing director of acquisitions Greg Campbell. “The property is located along the Highway 78 / Interstate 15 transportation corridor in one of the most desirable rental markets in North San Diego County. Waterleaf benefits from abundant drive-by traffic and proximity to shopping, recreation and several sizeable employment centers.”
He tells GlobeSt.com that “San Diego is experiencing an overwhelming supply-demand imbalance, and with a strong barrier to entry for new development, the competition for institutional quality multifamily assets is fierce,” says Campbell. “Still, we were able to acquire a quality asset with tremendous upside potential at significant discount to replacement cost.”
He adds that “San Diego is one of our top target markets, and we are attracted to the expanding economy and low vacancy rates found throughout the County. The vacancy rate for the market is projected to dip below 3.5% in 2015. In North San Diego County, there are some exciting economic developments that have grabbed our attention. Two exits to the East of Waterleaf you have the $300 million Carlsbad Mall conversion that will create 1,200 new construction jobs and 1,000 permanent jobs. In addition, the new desalination plant, also in Carlsbad, will create over 500 new jobs when completed later this year. The I-78 corridor is an area that we like a great deal, and we expect to invest there again in short order.”
Built in 1984 on a well located 20-acre site in northwest Vista, Waterleaf is a mix of one- and two-bedroom apartments ranging in size from 740 to 940 square feet, each with its own washer and dryer. The highly amenitized apartment community features a clubhouse, two pools/spas, fitness center, tennis and basketball courts, playground and pet park. The property was 97% leased at closing.
TruAmerica will undertake a multi-million dollar capital improvement program that will include common area upgrades and the completion of unit interior renovations that were started by the previous owner. Improvements will include faux-wood flooring, upgraded cabinets and countertops, and new appliance packages.
The acquisition fits well within TruAmerica's strategy to invest in value-added multifamily properties in core Western US locations and reposition them as affordable high quality workforce housing.
“With a robust economy that continues to foster demand for quality housing, San Diego is one of the most fundamentally sound multifamily markets in the nation,” adds Campbell. “Additionally, nearly half of the population is renters, compared to the national average of 35% among major metros.”
“We are pleased to be working with TruAmerica on this exciting opportunity, which aligns with our strategy of acquiring high quality properties with strong existing cash flows and potential upside opportunities,” says Brian Kelley, principal in Investcorp's Real Estate group.
The investment will benefit from attractive seven-year Freddie Mac fixed rate financing with full-term interest-only payments arranged by Trevor Fase and Mark Grace of Walker & Dunlop.
John Chu and Ed Rosen, executive directors with Cushman & Wakefield's San Diego multifamily advisory group, represented both parties in the transaction.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
