For some companies, the dislocation in the apartment market has provided an opportunity to sell older assets and buy new ones.
One of those firms is San Francisco-based apartment investor Jackson Square Properties, which sold Terra Nova Villas, a 233-unit apartment community in Chula Vista, California, near San Diego, to Pacific Urban Investors for $82 million in March. The buyer rebranded the property as The Emery at Terra Nova.
“Jackson Square has seen a dislocation in the market,” said Rachel Parsons, senior managing director of Berkadia Institutional Solutions, the New York City-based commercial real estate services firm that represented Jackson Square in the sale. “They've been actively selling some of their older legacy assets, which they’ve owned for 10-plus years. And they've been trading those into class A properties.”
With the sale of The Emery at Terra Nova, Jackson Square completed a reverse 1031 exchange. In December, it bought the property in the exchange — class A Broadstone Makers Quarter in San Diego from Scottsdale, Arizona-based developer and owner Alliance Residential. It then had six months to sell The Emery at Terra Nova.
Market reception
The Emery at Terra Nova transaction was completed within the six-month time frame due to strong interest in the property from local and regional private owners and operators. Parsons estimates she conducted roughly 30 property tours at the apartment community.
“We had really positive feedback from the market,” Parsons said. “San Diego multifamily is just a very low transactional market. As a result, having 233 units of a really beautiful, low-density, garden-style, two-story walk-up just checked a lot of boxes for groups.”
The Emery at Terra Nova’s units, averaging 787 square feet, feature stainless steel appliances, oversized closets, vaulted ceilings on the second-floor apartments and in-unit washers and dryers in the two-bedroom residences.
The property comprises 16 two-story walk-up residential buildings and a separate one-story building that includes a leasing center, business center and fitness center. Its amenities include a pool area, a dog park and two playgrounds, and its rents range from $2,175 to $2,955, according to Apartments.com.
“It's a pretty well-maintained property, and it gets pretty high rents [for its age],” Parsons said.
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