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10/10/16
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Trion Properties has repositioned and sold two multifamily communities in Sacramento in deals worth a combined $25.5 mil. The two dispositions include Sierra Village, a 185-unit garden-style apartment community, and Regalia Crest, a 128-unit multifamily asset. Trion Properties purchased Regalia Crest and Sierra Village in 2013 and 2014, respectively, for a total of $14.2 mil, reflecting a tremendous increase in value during the short hold period.
“The Sacramento market, which was hit pretty hard during the recession, has experienced tremendous recovery over the last several years, and investors are taking note,” says Max Sharkansky, Managing Partner of Trion Properties. “Investor groups are flocking to the region as multifamily demand continues to rise, and Sacramento remains the leader in the nation for the highest annual effective rent growth. Based on these market dynamics, we recognized that now was the time to seize the opportunity of the current bull market and sell these assets.”
In one of the recent dispositions, Trion Properties sold Sierra Village, a 1980s garden-style apartment community located at 5146 Jackson St, in the North Highlands submarket of Sacramento, for $15.5 mil. Acquired in January 2014 for $9.3 mil, Sierra Village was neglected during its prior ownership and presented a strong opportunity for deep value creation.
“This asset had endured a foreclosure during the downturn, and was being managed by a Texas-based company that was unable to realize its potential,” he says. “We understood from the start that implementing a strong management strategy would be critical in order to improve operations at the property.”
Within less than three years, Trion Properties had doubled the asset’s net operating income from $500k to $1 mil, operating at 98 percent occupancy. Interior renovations included new kitchen appliances, faux wood vinyl plank flooring, faux granite countertops, new bathroom vanities, new fixtures and lighting to modernize each unit. Trion Properties fully repositioned and stabilized the property within 18 months of the initial acquisition.
Marc Ross of CBRE represented Trion Properties as the seller and Oracle Properties Development as the buyer in this transaction. The property delivered an internal rate of return of more than 56% for Trion’s investors.
In the other transaction, Trion Properties sold Regalia Crest, a 128-unit apartment community in Sacramento, for $10 mil. Trion initially purchased the asset in April 2013 for $4.9 mil and sold it for more than double its initial purchase price three years later.
Regalia Crest was approximately 60 percent vacant at the time of acquisition and required an extensive renovation of both the common areas and interior units. Trion’s extensive capital improvements included new flooring, kitchen appliances, and modern amenities, as well as new paint to the exterior.
“By performing these much-needed renovations, we were able to bring the property’s occupancy rate from 40% up to 94%, further stabilizing the asset and increasing net operating income,” says Sharkansky. “This resulted in an attractive property with strong in-place occupancy, which garnered tremendous interest from investors.”
Regalia Crest is located at 3536 Watt Ave in Sacramento, California. Nate Oleson at ARA Newmark represented Trion Properties as the seller in this transaction. The buyer was a Bay Area-based company.
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