Tower 16 Aims to Build 2,000-Unit Apartment Portfolio in the Inland Empire
The firm has acquired a two-property 214-unit portfolio in Colton for $41 million as part of its acquisition strategy in the region.
Tower 16 Capital Partners has identified the Inland Empire as a high-growth multifamily market, and is planning to build a 2,000-unit portfolio in the region over the next several years. The firm has acquired a two-property 214-unit portfolio in Colton, California, for $41 million as part of the strategy.
Tower 16 purchased 1333 Canyon and Reche Ridge Apartments. 1333 Canyon is a 104-unit property built in 1986, while the Reche Ridge Apartments property has 110 units and was built in 1985. The company plans to invest an additional $4 million in capital improvements in both properties. The improvements will include a new clubhouses, fitness center, pool areas and the addition of barbeque areas, seating and outdoor gaming areas.
The investor purchased both properties in an off-market transaction from a private seller. Scott Peterson, Bill Chiles and Morgon Fraser of the San Diego CBRE Capital Markets team arranged debt financing on behalf of Tower 16. It currently has a 4,000-unit portfolio in the Western US, including California, Las Vegas, Arizona and Denver.
The Inland Empire is well positioned for tremendous growth in the next several years. Tower 16 co-founder Mike Farley says that demand is continuing to grow while there is limited new supply slated for the market. The supply-demand imbalance should fuel strong rent growth over the next several years, he says.
The demand is also attracting homebuilders. Brookfield Residential is among the leading developers in the market with three master plan communities, New Haven in Ontario, Audie Murphy Ranch in Menifee and Spencer’s Crossing in Murrieta. The developer says that job growth among industrial workers as one of the major demand drivers for new homes. In fact, industrial job postings were up more than 8% in 2020 compared to 2019 in Riverside County and San Bernardino County.
The data backs up the anecdotal demand trends. An Yardi report from earlier this year shows that the Inland Empire apartment market is among the top in the nation for rent growth, with rents .5% at the end of last year. The rent growth puts the market on par with headline grabbing metros like Phoenix and Orange County. It is in sharp contrast to major metros, like New York and San Francisco, which saw sharp rent declines over the last year.