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12/01/17
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JRK Property Holdings has acquired Diamond Hillside, a 242-unit garden style apartment community in the San Francisco East Bay community of Pittsburg. The asset was sold by a joint venture of McDowell Properties and Harbert Management Corporation in a transaction valued at $52.85 mil, or $218k/unit.
Located 29 miles east of Oakland along BART, Pittsburg offers residents suburban affordability coupled with ease of access to the major employers and resources of its urban neighbors. Diamond Hillside sits on 10 acres along Hwy 4 directly across from Los Medanos College, an 8,500-student community college.
Originally built in 1985, Diamond Hillside has since undergone significant physical improvements to both the exterior and the interior units in recent years. At closing, 114 of the units were completely updated with vinyl wood floors, new white shaker cabinetry, appliance packages, contemporary lighting, new hardware, plumbing fixtures and paint. Improvements were also made to the pool and spa area, clubhouse, and fitness center. A new dog park, children’s playground and barbecue area were also added.
JRK plans to spend an additional $1.5 mil to finish interior upgrades and modernize common areas to complete the property’s revitalization. Upon completion, JRK expects Diamond Hillside to boast a complete living experience that will compete with the submarket’s leaders.
With the acquisition of Diamond Hillside, JRK’s Northern California portfolio now totals more than 2,437 units with assets in San Jose, Petaluma and Sacramento.
“Diamond Hillside is a rare example of an institutional quality asset with both strong in-place returns and tremendous investment upside in the dynamic San Francisco metro,” said James Bloomingdale, JRK Senior Vice President and Head of Acquisitions. “Arguably the most affordable apartment submarket in the Bay Area, Pittsburg is served by easy access to the key employment centers and lifestyle amenities throughout the entire region via BART and Highway 4.”
In recent years, Pittsburg has emerged a leading beneficiary of the booming demand of the Bay Area, specifically as renters seek more affordable housing alternatives to the skyrocketing rents of more infill locations. Pittsburg has experienced nearly 15% rent growth since 2015 and over 6% in the past year alone. With median rents still 29% less than nearby Walnut Creek and approximately 40% less than those of the San Francisco metro, JRK and other investors remain confident in Pittsburg’s future.
Mark Leary, Nate Oleson and Rob LeDoux in the San Francisco office of ARA/Newmark represented both parties in the transaction.
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