Irvine Co. Mounting Apartment Construction Push
Cypress Village Open, More On WayMark Mueller Saturday, April 28, 2012
The grand opening of Cypress Village Apartment Homes, a new apartment complex in northeast Irvine, is just one of several area projects bound to boost Irvine Company’s profile in the multifamily market over the next few years.
Newport Beach-based Irvine Co. recently took the wraps off of Cypress Village, a four-community project off Trabuco Road, next to the Santa Ana (I-5) Freeway. The project, when it’s completed, will include 1,677 apartments in a mixture of styles, running from about 550 square feet to nearly 1,200 square feet.
Monthly rents will run from $1,478 to $2,791, according to the landlord. The company said more than 120 apartments were leased by mid-April.
Cypress Village is “one of the first—and the biggest—new apartment communities to open in Orange County since the Great Recession,” said Kevin Baldridge, executive vice president of Irvine Co. Apartment Communities, who spoke at an April 19 event showing off the new project.
It won’t be the last grand opening Irvine Co.’s apartment division will be hosting over the next few years.
The company—OC’s largest apartment owner—has about another 4,000 apartments under construction in Irvine alone or has plans in the works with the city.
In comparison, the 28 largest homebuilders here sold fewer than 1,800 homes in all of OC last year.
Other Irvine Co. apartment projects in the works include a 980-unit development in the Park Place campus near John Wayne Airport, the 1,750-unit Los Olivos project moving ahead near the former Wild Rivers water park, and a pair of land sites near its Park and Village complexes in the Spectrum that could see another 1,300 or so apartments built.
Irvine Co. also has apartment projects moving ahead in Northern California.
The developer currently ranks as the country’s 31st-largest apartment owner, with 44,545 units, according to a recent report by the National Multi Housing Council.
Irvine Co. would vault into the top 20 on that list once its latest projects are completed, assuming the portfolio of other owners on that list remained flat.
Irvine Co.’s apartment push doesn’t mean the company’s abandoning for-sale homebuilding on the Irvine Ranch. Along with ongoing projects like Stonegate and Laguna Altura, the company’s eyeing land next to the Cypress Village apartment project for another housing project in the not-too-distant future (see related story, page 1).
An investment fund run by Irvine-based real estate investor Steadfast Cos. is starting to amass a sizeable apartment portfolio in some far-flung locations across the Central U.S.
Cypress Village: to feature 1,677 apartments in mixture of styles
The company’s Steadfast Income REIT Inc., a non-traded real estate investment trust that began buying properties about two years ago, disclosed earlier this month it is paying a local owner $35.6 million for an apartment complex in Oklahoma City.
The investment fund said it is under contract to buy Montclair Parc, a 360-unit Oklahoma City complex that’s about 12 years old.
The sale works out to about $98,800 per apartment at the complex, which includes 202 one-bedroom units, 128 two-bedroom units and 30 three-bedroom units.
Montclair Park was more than 97% occupied as of this month, in keeping with the other well-leased apartment properties in the REIT’s portfolio, which averaged about 93% occupancy rates at the end of March.
The investment fund’s goal is to buy “stable apartment communities with operating histories that have demonstrated consistently high occupancy and income levels across market cycles,” according to Steadfast’s regulatory filings.
The Steadfast Income REIT has raised about $67 million from investors to date and has bought 11 apartment complexes totaling about 2,100 units since 2010, not including the Montclair property.
Those 11 complexes cost a total of $134.3 million, and were financed using $92.4 million in mortgage debt, according to regulatory filings.
Capitalization rates for those buys ran from 7% to 9.7%―a much higher cap rate than what has been seen for larger Southern California apartment transactions of late.
Other complexes include a trio of properties in both Missouri and Kentucky, as well as apartments in Illinois, Iowa and Kansas. The Montclair property would be the non-traded REIT’s second in Oklahoma, along with a 252-unit complex in Edmund that the fund paid $19.4 million for earlier this year.
Rents for the REIT’s current apartment portfolio average about $750 per month.
Steadfast Cos., the parent company of the REIT, is no stranger to apartment deals; it currently owns or operates more than 15,000 apartment units across 22 states.