Top, from left: The Franciscan Apartments, Ocean Breeze Village; bottom, from left: The Adelphi and Terra Oceanside | Courtesy Marcus & Millichap

Four Exchange Properties Trade for $68M

Carrie Rossenfeld Multifamily

Marcus & Millichap (M&M) has facilitated the sale of four Southern California multifamily properties valued at $67.7 million. All four were 1031-tax exchange transactions.

The properties are The Adelphi Apartments and The Franciscan Apartments, which together total 105 units and are located in Anaheim, California; and Ocean Breeze Village and Terra Oceanside, which have a total of 134 apartments and are in Oceanside, California.

Tyler Leeson, senior managing director investments, and Drew Holden, senior associate, in M&M’s Newport Beach, California, office, represented the sellers and procured the buyers. “The current market for Southern California multifamily assets is favorable to investors seeking to upgrade or reposition their real estate holdings,” Leeson says. “With the proper execution, 1031-tax exchanges can allow owners to use built-up equity to trade into larger or higher quality properties, increase return on equity, and defer payment of capital gains taxes.”

Adds Holden, “Our access to a wide range of inventory allows us to quickly identify properties that fit very well with the real estate goals of buyers and the sellers.”

Michael Derk, senior managing director capital markets, and Nick Gray, associate director, both with Marcus & Millichap Capital Corp. arranged $17.5 million in acquisition financing for The Adelphi Apartments and The Franciscan Apartments. The debt placement was structured with a five-year term and two years of interest-only, fixed-rate financing.

Derk and Gray also arranged $10.5 million in financing for the sale of Terra Oceanside. That debt was structured with a seven-year term and three years of interest-only, fixed-rate financing.

“We locked in the interest rate on all of the deals for 120 days, which is a major exception in the current marketplace, and we leveraged our strong track record and large volume of business over the years to negotiate lower-than-market spreads with the lender,” Derk says.

Kurt Hediger, senior associate, provided additional representation in the sale of Terra Oceanside, and VP investments Matt Kipp assisted in the sales of The Adelphi Apartments and The Franciscan Apartments.