Marcus & Millichap Closes $71 Million Affordable Housing Asset Sale in Silicon Valley

Rhea-AI Summary

Marcus & Millichap (NYSE: MMI) has announced the sale of Moreland Apartments, a 160-unit affordable housing asset in San Jose, California, for $71 million ($443,750 per unit). The property, developed in 1982, features a Project-Based Section 8 Housing Assistance Payments contract for all units, valid through July 2029. Located near Downtown San Jose, the garden-style community comprises eight two-story residential buildings and one single-story office/amenities building on an eight-acre parcel.

The transaction was facilitated by Marcus & Millichap's team, including Mitchell Zurich, Kirk Trammell, David Cutler, and Joshua Johnson. The firm, specializing in commercial real estate investment sales, financing, research, and advisory services, closed 7,546 transactions in 2023 with a sales volume of approximately $43.6 billion.

Positive

• Successfully closed a significant $71 million affordable housing asset sale
• Property has a Project-Based Section 8 contract for all units through July 2029, ensuring stable income
• Demonstrates MMI's capability in handling large-scale affordable housing transactions
• Closed 7,546 transactions in 2023 with a sales volume of $43.6 billion

Negative

• None.

Insights

Real Estate Analyst

The sale of Moreland Apartments for $71 million highlights ongoing demand for affordable housing assets in high-demand markets like Silicon Valley. The property’s long-term Project-Based Section 8 Housing Assistance Payments contract, running through July 2029, ensures a steady revenue stream. This stability is attractive for investors seeking predictable cash flows in a generally turbulent real estate market.

From a retail investor's perspective, Marcus & Millichap's ability to facilitate such a sizable transaction underscores its strong brokerage capabilities and extensive network. Considering the property had not changed hands since 1982, the deal’s successful closure demonstrates the firm's adeptness at navigating complex market dynamics and long-standing ownerships.

However, it's worth noting that the sale price of $443,750 per unit may seem high, but reflects the premium for affordable housing assets in tech-heavy regions. This points to sustained investor confidence in the long-term viability of such assets, backed by governmental rent subsidies.

For Marcus & Millichap, this transaction boosts their portfolio of successfully closed deals, reinforcing their market position and potentially driving their stock value up in the short term due to increased investor confidence. For the long term, continued success in similar high-value transactions could solidify their reputation and market share.

SAN JOSE, Calif.--(BUSINESS WIRE)-- Marcus & Millichap (NYSE: MMI), a leading commercial real estate brokerage firm specializing in investment sales, financing, research and advisory services, announced today the sale of Moreland Apartments, a 160-unit affordable housing asset in San Jose, California. The property sold for $71 million, or $443,750 per unit.

“On the market for the first time since it was developed in 1982, the property has a Project-Based Section 8 Housing Assistance Payments contract for all units that runs through the end of July 2029,” said Mitchell Zurich, senior managing director investments in Marcus & Millichap’s Palo Alto office. Zurich, and Marcus & Millichap’s Kirk Trammell, David Cutler, and Joshua Johnson represented the seller, the original developer of the property, and procured the buyer.

Moreland Apartments is a short drive from Downtown San Jose. The Plaza shopping center and Maple Leaf Plaza are nearby. The property is a garden-style community composed of eight two-story residential buildings and one single-story office/amenities building on an eight-acre parcel. The apartments have one- and two-bedrooms and are 620 and 850 square feet in size, respectively, and the three-bedroom townhouse units are 1,150 square feet. Amenities include a community room, three laundry rooms, a children’s playground, and carports.

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/20240717566438/en/

Gina Relva, VP of Public Relations

Gina.Relva@MarcusMillichap.com

510-999-1284

Source: Marcus & Millichap, Inc.

FAQ

What was the sale price of Moreland Apartments in San Jose, California by Marcus & Millichap (MMI)?

Marcus & Millichap (NYSE: MMI) announced the sale of Moreland Apartments in San Jose, California for $71 million, which equates to $443,750 per unit.

How many units does the Moreland Apartments property have and when was it developed?

Moreland Apartments is a 160-unit affordable housing asset that was originally developed in 1982.

What type of contract does Moreland Apartments have and until when?

Moreland Apartments has a Project-Based Section 8 Housing Assistance Payments contract for all units that runs through the end of July 2029.

How many transactions did Marcus & Millichap (MMI) close in 2023 and what was the total sales volume?

Marcus & Millichap (NYSE: MMI) closed 7,546 transactions in 2023, with a total sales volume of approximately $43.6 billion.