Real estate investment firm Gelt Inc. is eyeing a $300 million multifamily shopping spree in the western U.S. this year after selling an apartment community in Los Angeles County for $62.5 million—$17 million more than what it paid for the asset a few years ago.
Gelt handed off Monterra Ridge Apartments, a 232-unit property in Santa Clarita, Calif., to Alan J. Gindi’s B.A.G. Investments after acquiring the 16-building community in June 2016 for $45.5 million. Built in 1985, the property sits on a 22-acre lot at 28085 Whites Canyon Road and features a mix of one- and two-bedroom units.
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Jeff Harris, partner with Gelt, noted in a statement that the company would invest the proceeds from the sale into a “marquee” multifamily asset in the Denver region. He added that Gelt is seeking to acquire $300 million of apartment properties in Denver, Salt Lake City, Seattle, Portland, Ore., Albuquerque, N.M., Reno, Nev., and Southern California during 2020.
“We are attracted to the Denver market because the millennial population (2 percent) has grown four times the national average and job growth (2.8 percent) is more than double the national average,” Josh Satin, director of acquisitions at Gelt, noted to Multi-Housing News. “We also like the relatively affordable rent to income ratio (27 percent) when compared to other Western cities.”
A good time to sell
Gelt’s current portfolio of 28 properties across western states includes five communities in Colorado totaling 1,918 units. The company picked up Cedar Run, a 384-unit asset in Denver, for $62 million in May. The seller was Maxx Properties. In October, Gelt followed up that deal by acquiring Timber Lodge, a 390-unit community in Thornton, Colo., from Oak Coast Properties for $61 million.
Upon acquiring Monterra Ridge Apartments, Gelt rolled out a capital improvement program that included upgrades to the fixtures, appliances and flooring of about 65 percent of the unit interiors. The company decided to sell after determining that its projected eight-year investment goal would be achieved after just 3.5 years of ownership.
Gregory Harris, Kevin Green and Joseph Grabiec with Institutional Property Advisors, the multifamily brokerage division of Marcus & Millichap, represented both sides of the deal with B.A.G. Investments.
Gelt exited Monterra Ridge Apartments at a time of healthy multifamily growth in Los Angeles. Overall rents in the metro gained 3.2 percent year-over-year through June, just below the 3.3 percent national growth rate, according to a report by Yardi Matrix.
Santa Clarita, a city of more than 210,000 people north of Los Angeles, was the metro’s top submarket for transaction volume during the 12 months through June 2019, clocking in at $392 million in multifamily deals.