BRE Properties Buys a Little, Sells a Little in California in Three Deals Totaling $209.6M

In the largest of the three transactions, BRE snapped up the 500-unit Aqua Marina del Rey in Marina del Rey for $166 million, a figure well below replacement cost.

September 2, 2010
By Barbra Murray, Contributing Editor

Moving forward with its strategy of focusing its investment activity on Coastal California markets, San Francisco-based BRE Properties Inc. has sold an apartment property and acquired an apartment community and developable land in transactions valued at an aggregate $209.6 million.

In the largest of the three transactions, BRE snapped up the 500-unit Aqua Marina del Rey (pictured) in Marina del Rey for $166 million, a figure well below replacement cost. The property had been foreclosed upon by Brookfield Asset Management Inc. after a loan default by then-owner Stellar Management. Located in Los Angeles County on nearly six acres of land, the nine-year-old community encompasses two four-story structures, each sitting atop two levels of parking. BRE is planning to upgrade the property over the next three years.

BRE also acquired 2.4 acres of debt-free land in Sunnyvale in Northern California’s Silicon Valley. The site is located across from a CalTrain station and can accommodate the development of 280 apartment units. With the acquisition, the REIT now has two developable land parcels in the area.

The last of the three transactions involved BRE’s disposition of Boulder Creek, a rental community situated in Riverside within the Inland Empire market. The 264-unit property commanded $24.6 million and left the company with an expected gain on sale of approximately $7.8 million. Proceeds from the deal provided partial payment for the Aqua Marina del Rey and Sunnyvale land acquisitions, leaving the REIT to fund the remainder of the purchase price through its revolving credit facility.

BRE has spent the year “going coastal,” so to speak, having previously purchased two Southern California apartment properties and two San Francisco Bay-area communities with an aggregate 1,037 residential units, as well as a parcel of land in deals totaling $312 million.

“Right now, about 65 percent of our net operating income comes from California,” a company representative told CPE. “We have had a California-centric strategy in place for quite a long time.” BRE’s portfolio of directly owned and operated apartment communities consists of 75 properties featuring an aggregate 21,064 residential units in California, Arizona and Washington. The company also has five projects totaling 1,568 units in various stages of development, in addition to joint venture interests in 13 properties accounting for 4,080 units.