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MULTIFAMILY NEWS
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Interstate Equities Corporation Closes on $46 Mil Bay Area Multifamily Buy

8/23/16

In a recent institutional multifamily acquisition in the Bay Area, Interstate Equities Corporation (IEC) has acquired a 137-unit, value-add property in Milpitas for $46 mil ($336k/unit). The property, formerly called Meritage Apartments, will be rebranded to “555 Apartments.” The asset was acquired through IEC Institutional Fund III, L.P., a fully discretionary, $200 mil commingled fund that closed earlier this year.

Built in 1973, “555 Apartments” will undergo a series of capital improvements as part of IEC’s value-add investment strategy. “We can substantially increase rents through operational improvements, rebranding, and management efficiencies,” says Julia Boyd Corso, Co-President of IEC. “By revitalizing the property, we are improving quality of life for current residents and delivering a product that will attract renters throughout the Bay Area.”

This acquisition brings IEC’s total equity committed to roughly fifteen percent, which translates to an additional $600 mil of buying power that will be deployed over the next several years. The firm’s investment strategy is to target unrenovated or partially renovated apartment communities consisting of 20 to 400 units, located in coastal infill markets that are demonstrating steady growth and are resilient to economic pressures.

“Milpitas is a dynamic submarket that is gaining ascendancy in the Bay Area,” explains Marshall Boyd, Co-President of IEC. “Situated between the East Bay and Silicon Valley, Milpitas is uniquely positioned to cater to the increasing demand for quality housing near major tech employers in both regions. The rising employment growth in this market, coupled with the availability of mass transit options linking both Fremont and San Jose will drive resident demand for this asset.”

Salvatore Saglimbeni, Stanford Jones, and Philip Saglimbeni of Institutional Property Advisors, as well as Carlos Azucena of Marcus and Millichap, brokered the transaction.

In addition to the Milpitas asset, IEC has acquired four value-add multifamily properties throughout Northern and Southern California through IEC Institutional Fund III, L.P., bringing the total number of units acquired for this fund to date to 240. The acquisitions in this fund include:

• Woodside North & South – Redwood City, CA: IEC acquired this portfolio in an off-market transaction for a total of $15.4 mil.

• Pacifica Glendale – Glendale, CA: IEC acquired Pacifica Glendale Apartments, a 40-unit multifamily community in Glendale, for $8.05 mil.

• The District – Fremont, CA: Located in an infill submarket of the East Bay, The District is a 24-unit multifamily community that IEC acquired for $6.88 mil in an off-market transaction.

On the heels of this acquisition activity, IEC has also completed the disposition of 12 multifamily assets totaling 1,200 units year to date, bringing each asset full-cycle for the firm’s investors.






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