$146.5 Million Inland Empire Multifamily Sale Closed By Marcus & Millichap’s Institutional Property Advisors Division

Rhea-AI Summary

Marcus & Millichap's Institutional Property Advisors (IPA) announced the sale of Silverado Apartment Homes in Murrieta, CA, for $146.5 million, averaging $297,764 per unit. The sale was managed by IPA's Kevin Green, Joseph Grabiec, and Gregory Harris. The property offers a unique opportunity with strong market fundamentals and assumable financing below current rates. Average household income in the area is $138,000, with projected rent growth of 10.3% over the next year and 6.1% annually over the next five years.

Positive

• Sale of Silverado Apartment Homes completed for $146.5 million.
• Sale price averages $297,764 per unit.
• Assumable financing approximately 300 basis points below current rates.
• Projected 10.3% rent growth in Murrieta over the next 12 months.
• Average annual household income in the area is $138,000.
• Average year-over-year rent growth projected at 6.1% over the next five years.

Negative

• No significant negative financial aspects reported in the press release. Investors should be cautious of potential market volatility and economic downturns that were not addressed in the PR.

Insights

Financial Analyst

The sale of Silverado Apartment Homes for $146.5 million stands out in the real estate market, where considerable capital investment decisions always garner attention. The sale price translates to approximately $297,764 per unit, which reflects a robust valuation considering the property’s age and location. Importantly, the transaction is underpinned by assumable financing, around 300 basis points below current rates, offering the buyer a significant financial advantage.

This kind of deal is interesting for several reasons. First, it highlights the strong fundamentals of the Inland Empire submarket, suggesting possible future appreciation and rent growth. The predicted rent increase of 10.3% over the next year and an annual average growth of 6.1% over the next five years underscore a favorable outlook for income generation. Evaluating these projections, along with the comparably high household income in the area, helps solidify the attractiveness of this investment.

From an investor’s perspective, these factors suggest a potential competitive return on investment. However, investors should also consider the broader economic context, including interest rate trends and potential supply-demand dynamics in the market, to better understand the long-term viability of such high valuations.

Market Research Analyst

The acquisition of Silverado Apartment Homes by Bell Partners sheds light on the growing appeal of the Inland Empire for multifamily investments. The region's demographics, such as an average annual household income of $138,000—higher than some neighboring areas—indicate a solid consumer base capable of supporting rental growth. The area's connectivity via interstates 215 and 15 and proximity to shopping centers and nature reserves add to its attractiveness.

The expected rent growth figures—10.3% over the next 12 months and an annual average growth of 6.1% over the next five years—highlight a strong market demand. These statistics suggest that the region is not just a passing trend but a sustainable market for multifamily investments.

For potential investors, this data is crucial. Higher-than-average rent growth rates and solid income demographics can lead to significant revenue streams, important for long-term investment planning. However, one must also factor in broader economic conditions that might influence these projections, such as shifts in employment rates or economic slowdowns.

MURRIETA, Calif.--(BUSINESS WIRE)-- Institutional Property Advisors (IPA), a division of Marcus & Millichap (NYSE:MMI), announced the sale of Silverado Apartment Homes, a 492-unit multifamily property in Murrieta, California. The property sold for $146.5 million, which equates to $297,764 per unit.

“Silverado presented a unique opportunity to acquire a newer vintage Inland Empire asset with substantial upside in a burgeoning submarket with strong fundamentals,” said Kevin Green, IPA executive managing director investments. “Our controlled process was met with a positive response and yielded a highly competitive sales environment. The opportunity was bolstered by assumable financing, approximately 300 basis points below today’s rates. The acquisition gives the buyer a sizeable footprint in a strong market.” Green and IPA’s Joseph Grabiec and Gregory Harris represented the seller, Realty Center Management, Inc., and procured the buyer, Bell Partners.

“Highlighting the above-average demographics in this submarket drew additional activity in an area lesser known by the broader investment market,” said Grabiec. “Average annual household income in the area surrounding Silverado is $138,000, which is on par with Orange County and over 11% higher than nearby Rancho Cucamonga and Corona. Rents are projected to grow in Murrieta by 10.3% over the next 12 months. Average year-over-year annual rent growth over the next five years is projected to be 6.1%.”

Built in 2007 on 22 acres, the property is accessible from interstates 215 and 15. Sierra Vista Plaza, Plaza Las Brisas, and Murrieta Pointe shopping are nearby. Lake Skinner Recreation Area and Santa Rosa Plateau Ecological Reserve, a 9,000-acre nature conservation area, are within a short drive. Employers in Murrieta include Rancho Springs Medical Center, Murrieta Valley Unified School District, and Loma Linda University Medical Center.

Silverado Apartment Homes has two swimming pools and spas, covered and garage parking, a central courtyard, a clubhouse with an entertainment lounge and a demonstration kitchen. The apartments have hardwood floors, walk-in closets, and washers and dryers. The average unit size is 948 square feet.

About Institutional Property Advisors (IPA)

Institutional Property Advisors (IPA) is a division of Marcus & Millichap (NYSE: MMI), a leading commercial real estate services firm in North America. IPA’s combination of real estate investment and capital markets expertise, industry-leading technology, and acclaimed research offer customized solutions for the acquisition, disposition and financing of institutional properties and portfolios. For more information, please visit www.institutionalpropertyadvisors.com

About Marcus & Millichap, Inc. (NYSE: MMI)

Marcus & Millichap, Inc. is a leading brokerage firm specializing in commercial real estate investment sales, financing, research and advisory services with offices throughout the United States and Canada. As of December 31, 2023, the company had 1,783 investment sales and financing professionals in over 80 offices who provide investment brokerage and financing services to sellers and buyers of commercial real estate. The company also offers market research, consulting and advisory services to clients. Marcus & Millichap closed 7,546 transactions in 2023, with a sales volume of approximately $43.6 billion. For additional information, please visit www.MarcusMillichap.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240520173041/en/

Gina Relva, VP of Public Relations

Gina.Relva@MarcusMillichap.com

Source: Marcus & Millichap, Inc.

FAQ

What was the sale price of Silverado Apartment Homes by Marcus & Millichap's IPA division?

The sale price was $146.5 million.

How many units are there in Silverado Apartment Homes in Murrieta, CA?

There are 492 units in Silverado Apartment Homes.

What is the average price per unit for Silverado Apartment Homes sold by IPA?

The average price per unit is $297,764.

What is the projected rent growth in Murrieta over the next 12 months?

Rent growth in Murrieta is projected to be 10.3% over the next 12 months.

Who represented the seller in the sale of Silverado Apartment Homes?

The seller was represented by IPA's Kevin Green, Joseph Grabiec, and Gregory Harris.