TruAmerica Acquires SoCal Community for $103M

How this big deal surmounted a tough financing market.

The Santa Ana

The Santa Ana property was completed in 2016. Image courtesy of TruAmerica and PCCP

TruAmerica Multifamily has acquired Nineteen01, an apartment community in Santa Ana, Calif., for $102.9 million, in partnership with PCCP. The project was completed in 2016.

“The biggest challenge was executing on this deal during a rising interest rate environment,” Noah Hochman, TruAmerica Multifamily co-chief investment officer and head of capital markets, told Multi-Housing News.

“When we were first awarded the deal in April of this year, loan quotes were fixed at a 4.75 percent interest rate. However, at the completion of diligence, interest rates had quickly increased over 100 basis points, punitively impacting the loan with an interest rate of 5.75 percent, resulting in a loss of $10 million in loan proceeds. As a result, we were fortunate that the property had an existing floating rate loan that we could assume, which we were able to do. We also purchased a five-year interest rate hedge in order to replicate similar fixed rate financing terms that we initially had in April.”

Situated at 1901 East 1st Street, the apartment community includes a three- and five-story wrap building offering one- to three-bedroom apartments averaging 1,033 square feet in size. The apartments include open-concept floorplans, private patios or balconies, large walk-in closets and full-size washers and dryers. Among common area amenities is a private conference room.

Expected average annual rent growth in the area is 3.69 percent through 2027, Axiometrics reported. Located near Santa Ana College, the largest community college in the Golden State, Nineteen01 is situated less than five miles from Costa Mesa, and within a 10-minute drive from Newport Beach. It is also at the center of the region’s job hub. Multiple hospitals and medical centers are proximate, among them Children’s Hospital of Orange County and St. Joseph Hospital, which collectively employ more than 10,000. The apartment community is also near dozens of dining, nightlife and shopping venues.

Three months ago, TruAmerica obtained $300 million to refinance five communities.

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