Behringer Harvard to Invest in Luxury M-F Development in Costa Mesa, Calif.

April has been a busy month for Behringer Harvard, which is announcing its investment in a third luxury multi-family housing development through its Behringer Harvard Multifamily REIT I Inc.

April has been a busy month for Behringer Harvard, which is announcing its investment in a third luxury multi-family housing development through its Behringer Harvard Multifamily REIT I, Inc. The latest investment project is a 113-unit apartment community located in Costa Mesa, Calif., in Orange County.

The amount of the equity investment in Pacific Gateway was not disclosed. The luxury apartment community will be built on a 2.5-acre site at Bernard Street and Harbor Boulevard. Construction is expected to start this month and be completed by the fourth quarter of 2014. The project will be developed and constructed by affiliates of Fairfield Residential, a San Diego-based developer and multi-family management firm.

“Pacific Gateway will be one of the few newly constructed apartment communities in the highly desirable Newport Beach and Costa Mesa submarket in Orange County,” Mark Alfieri, the REIT’s COO, said in a news release. “We were attracted to this opportunity to invest in a top-quality asset in an institutional market with favorable demographics and high barriers to entry.”

The mid-rise apartment community will have units with up to three bedrooms and two baths, averaging about 985 square feet each. The common area will feature a swimming pool, outdoor pavilion and business center. Located near California State Route 55, the complex is near major employment centers in Costa Mesa, Irvine and Santa Ana.

The rental market is strong is Orange County, where single-family home prices are still high. Countywide, vacancy is expected to rise to 4.6 percent, 10 basis points above the year-end 2012 rate, according to Marcus & Millichap’s ApartmentResearch Market Report for the second quarter. The report notes that rents should increase about 4.8 percent to an average effective rent of $1,669 per month. Effective rents ranged from $1,264 per month in the West Anaheim submarket to $1,919 in the South Irvine submarket.

Last week, Behringer Harvard announced it was investing in Seven RIO, a 220-unit luxury apartment community in Austin, Texas, as an equity partner. Behringer Harvard will have a 90 percent stake at an estimated cost of $60.7 million, according to a filing with the SEC. CWS Capital Partners L.L.C. is the project developer. In early April, Behringer Harvard teamed up with Trammel Crow Residential to construct a 270-luxury apartment complex in the Montrose/Museum District submarket of Houston. The REIT’s expected share of that project is about $51.2 million, according to a SEC document.

The REIT has worked with Fairfield Residential on numerous projects in recent years, including Fairfield at Columbia Village, a 234-unit, multi-family residence in Arlington, Va., and Cameron House in Silver Spring, Md. Brookfield Residential Opportunity Fund also teamed with Fairfield and Behringer Harvard on that project, a 15-story building with 325 apartments.