JV Bets on Apartment Community Near Reno
- Mar 07, 2016
San Francisco—A 264-unit Class A apartment community in the Sparks submarket of Reno, Nev., is getting a face lift thanks to a $28.2 million senior loan provided by PCCP LLC. A joint venture between Sunroad Enterprises, Security Properties and Loma Linda University plans to acquire and renovate Bristol Bay, the 97-percent occupied apartment complex. HFF’s Tim Wright, Aldon Cole and Akhil Israni arranged the financing.
Erik Flynn, managing director with PCCP, said that the loan will allow the partnership to enhance the property’s quality and capitalize on the rental housing demand in Reno. “This demand is exemplified by decreasing vacancies and rents that have increased about 6 percent over the last 12 months in this market,” he said.
This acquisition marks Sunroad Enterprises’ first for its new multifamily division. The company acquired the property for $35.5 million, which will be renovated by Security Properties and managed by its affiliate, Madrona Ridge Residential.
Bristol Bay, located at 5200 Los Altos Parkway, encompasses 33 two-story buildings with one-, two- and three-bedroom units, averaging 922 square feet. The new owners are planning a value-add renovation through common area and unit renovations. The clubhouse, pool and landscaping will be upgraded and the units will be getting new appliances, flooring and countertops.
The property offers easy access to Interstate 80 and the wider Reno area, which has benefited from several large employers relocating to and expanding in the region. In 2012, Apple was approved to build a data center in the Reno Technology Park in Washoe County, named “Project Mills,” and was given an $89 million tax abatement from the Nevada Governor’s Office of Economic Development. The company plans to invest $1 billion in the region over the next decade and has recently filed a permit to build a new set of facilities, called “Project Huckleberry” near the original data center site, according to the Reno Gazette-Journal.
Another big name is also moving into the region, with Tesla investing $5 billion to build its Gigafactory in the massive Tahoe Reno Industrial Center. The move reflects the company’s plans for expansion as it will manufacture an estimated 500,000 battery packs for its electric cars at the site once its operational.
Reno’s apartment market is also thriving as vacancy rates have dropped below 5 percent with strong rent growth over the past year—and there’s no signs of slowing down, according to PCCP. Continued employment and population growth should continue to drive rental demand in the region, and developers are responding. According to the Tahoe Daily Tribune, there are currently 970 units under construction in Reno and Sparks, with another 3,797 in various stages of planning.