Juniper Terrace Apartments, a 43-unit garden style building at 1580 S Juniper St., was sold last week for $7.7 million to The Bascom Group, an Irvine-based commercial real estate company with 270 multifamily properties nationwide.
Built in 1973, the property features low density single-family home style living with oversized apartments and expansive views, according to Bascom officials who apparently got a good deal. The apartment complex had been listed at $7.95 million, or about $178 per-square-foot.
“Due to minor deferred maintenance, we can put most of our capital dollars into upgrades that will remodel interiors and enhance the community to compete with newer, rental product.” Bascom principal James D’Argenio said.
Bascom’s planned modernization program will remodel the interiors and enhance the amenities, exterior, and overall curb appeal, officials said.
While that sounded like good news for tenants, they may want to reconsider the redevelopment. It may come attached to a price tag, i.e. rising rents.
The sales pitch when the apartments were on the market included references to “trailing occupancy at 1 percent,” meaning “rent increases can be implemented immediately,” adding, “With renovation, there is potential to increase rents even further.”
New owners also could install utility, water, sewer and trash sub-meters and begin charging residents based on absolute use rather than a formula representing “value-add potential for additional income.”
The unit mix is entirely 2-bedroom, 2-bathroom units averaging 1,039-square-feet. A spacious floor plans, coupled with private two-car garages, produces the feel of a single-family home community, according to Bascom. Juniper’s outside amenities include a pool and jacuzzi, recreation room, and leasing office.
Escondido’s apartment market continues to strengthen
Bascom officials said they got into Escondido because they were encouraged by the local apartment market as rents increased 6.7 percent from the final quarter of 2014 to final quarter last year.
Escondido’s apartment vacancy rate now sits at 3.3 percent.
Roadblocks to home ownership and below-average vacancy rates will continue to push apartment rents higher and drive the demand for modernized, rental housing throughout Escondido and San Diego County, according to Bascom senior vice-president Lee Nguyen.
“We’re acquiring a well located, stabilized building that is ready for renovations in an expanding north San Diego economy,” Nguyen said. “Our San Diego projects have performed well over the years so we are excited about the project.”
Bascom, founded by principals Jerry Fink, David Kim and Derek Chen, has completed over $10 billion in multi-family and commercial value-added transactions since 1996 including more than 270 multifamily properties containing over 71,000 units. Bascom has ranked among the top 50 multifamily owners in the US.
Bascom sources value-added and distressed properties including many through foreclosure, bankruptcy, or short sales and repositions them by adding extensive capital improvements, improving revenue, and reducing expenses by realizing operational efficiencies through implementation of institutional-quality property management, according to officials.