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2/16/16
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LA-based Trion Properties has purchased two value-add multifamily assets in the East Bay, the most highly populated region of San Francisco’s Bay Area. The two acquisitions, a 30-unit apartment community in Hayward and a 38-unit complex in San Leandro, cost a combined $13.58 mil.
The properties, situated within close proximity to the Silicon Valley, San Francisco, and Oakland job markets, provide easy access to thousands of jobs for renters who are being pushed out of the central Bay Area due to high rents. They were purchased as value-add assets by Trion, which specializes in opportunistic investments.
According to Farhan Mahmood, Director of Acquisitions at Trion, the Hayward and San Leandro properties charge rents that are roughly 35 percent less than asking rates in the more expensive surrounding submarkets. Trion anticipates high tenant demand which, combined with its aggressive lease-up and renovation strategy, will drive strong cash flow, as well as rates of return in excess of 30 percent.
Debt for both transactions was arranged by Los Angeles-based Continental Funding Group, with a 70 percent loan-to-cost floating rate loan that has an interest rate of 3.5 percent over LIBOR.
In Hayward, Trion acquired a 30-unit apartment community located at 23924 2nd St for $6.65 mil ($222k/unit). The property offers convenient access to two BART stations, an Amtrak station, and the San Francisco International Airport, providing tenants with a variety of options for commuting to work or traveling.
Known as the “Heart of the Bay” because of the city’s central location in Alameda County, Hayward is nestled between rapidly expanding job markets such as San Francisco and San Jose and is poised for economic growth. Downtown Hayward has recently undergone a huge rejuvenation with a $105 mil, six-mile renovation called the Hayward Loop, which has reduced commute times by 30 percent and has refurbished the city’s downtown by adding trees, street art and upgrading storefronts.
“In addition to its ideal location, the Hayward apartment presents a tremendous opportunity to improve its facilities through extensive renovations, thereby creating value for current and prospective tenants seeking high quality living arrangements in the East Bay area,” notes Mahmood.
Trion Properties plans to invest approximately $713k in renovations which include installing vinyl wood plank flooring, quartz kitchen countertops, stainless steel appliances, modern cabinets, new light fixtures, and smart locks to revitalize the interior of each unit, according to Mahmood.
Tom Hyman at Highland Investment Properties Inc. brokered the transaction.
348 Estabrook St, San Leandro |
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In San Leandro, Trion and joint-venture partner Holualoa Companies paid $7.2 mil for a 38-unit ($189k/unit) apartment complex located at 348 Estabrook St. The property offers immediate access to BART stations, the Oakland International Airport, and the San Leandro Technology Campus, a 500k sf campus of connected office space adjacent to the BART station. The San Leandro Technology Campus, known as the “future of business and industry,” will bring an estimated 1,800 high quality jobs to San Leandro, thereby driving exponential economic growth in the next few years.
Trion and Holualoa plan to invest approximately $1 mil in renovations into the property, which include installing vinyl wood plank flooring, quartz kitchen countertops, stainless steel appliances, modern cabinets, new light fixtures, and smart locks.
Eduardo Vergara at Marcus & Millichap represented Trion in the transaction.
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