Inside TruAmerica Multifamily’s Largest SF Acquisition

The company's acquisition garnered a lot of attention.

Los Angeles—In what is its largest San Francisco Bay Area acquisition, TruAmerica Multifamily, in partnership with Intercontinental Real Estate, has purchased Maribelle Apartment Homes in Santa Rosa, Calif. The garden-style, 287-unit apartment community was purchased for $59 million.

Featuring a blend of one- and two-bedroom apartment homes, the 28-year-old Maribelle Apartments is Santa Rosa’s largest apartment community. Sprawling across a low-density, 13.4-acre site, the property offers residents a clubhouse fitness center, resort-style pool, dog park and picnic area with barbecues.

“I can’t tell you how many bidders there were, but we did come up bidding against some exchange buyers,” Greg Campbell, senior managing director of acquisitions for TruAmerica, told MHN. “[The] plusses were location and proximity to the downtown corridor, which has one of the few downtown entertainment centers in the county. [That] far outweighed any minuses, which were the project’s curb appeal and obvious need of capital infusion.”

Another plus for the property was the location in Santa Rosa, Campbell added. The city has benefitted from a spillover of renters from San Francisco, and rents have been rising quickly. “We felt this property had solid rental upside that we could capture through detailed renovations,’ he said.

Maribelle Apartment Homes offers residents convenient access to U.S. 101 and California State Highway 2. It is located near the soon-to-be-completed Santa Rosa Station of the Sonoma Marin Rail Transit Service.

The Historic Railroad Square and downtown districts are within steps of the property, which is situated within a three-mile radius of more than 2.5 million-square-feet of stores, restaurants and entertainment venues.

San Francisco and the Peninsula have experienced 46 and 50 percent hikes in rent growth respectively over the past four years, according to Real Facts.

The result has been additional upward pressure on rents in outlying areas. For instance, rents have increased about 28 percent in the last four years in Santa Rosa, a community about 50 miles north of San Francisco. Rents are likely to continue rising in Santa Rosa, where little new product has entered the pipeline in recent years, and the average rental occupancy rate stands at 97 percent.

”There is probably greater demand for workforce housing in the Bay Area than in any other region of the Unite States,” Campbell estimated. “Unlike many large cities where economic growth is limited to a particular area, the Bay Area is continuing to experience strong economic fundamentals across an entire region, [stretching] more than 100 miles from San Jose to Santa Rosa.”

The acquisition process did not present great challenges for TruAmerica. “The numbers worked very well,” Campbell said. “There are a lot of similar vintage properties in the area undergoing renovations. So we could see what had been done and what was working.”

Added Jessica Levin, director of acquisitions for Intercontinental Real Estate: “At our cost basis, we will be able to upgrade the property while still keeping rents in line for working-class families. “This acquisition falls squarely into our value-add investment strategy, of which TruAmerica shares a similar mission and has been a fantastic partner.”