Mesa West Capital has provided loans totaling $51.4 million for the acquisition and renovation of two multifamily rental properties in the San Francisco Bay area of California, an area experiencing unrelenting rent spikes.
Mesa West cited the Bay Area’s booming rental market as a sign that the loans, which carry loan-to-value ratios between 65% and 75%, will be well served.
Palo Alto, California-based Pacific Urban Residential snagged a $31 million first mortgage loan for the acquisition of Park Towers, a six-story apartment building at 535 Everett, near Stanford University. The firm paid $36.5 million for the property, which was built in 1964 and features 90 studio and one-bedroom apartments.
California Landmark Group (CLG) secured a separate $20.4 million first mortgage loan for the acquisition and repositioning of the 80-unit Woodlark Apartments in Larkspur. CLG paid $24 million for that property, which was built in 1962 and comprises 11 two-story buildings on a four-acre site. A portion of the loan proceeds will go towards renovations that include new appliances, flooring, stone countertops, washers and dryers, as well as a new gym and leasing office.
Rents in the nine-county Bay Area hit record highs of $2,158 per month in the second quarter, up 5.6 percent from the first quarter and 20 percent since the second quarter of 2011, according to a report from RealFacts.
“The San Francisco Bay area rental market is arguably one of the strongest in the United States, with the average rent per square foot double that of the national average and vacancies well below five percent,” said Mesa West principal Ronnie Gul in a written statement. “With a limited inventory of rental housing and an increase in household formation due to the improving local economy, we are confident in the performance of the local rental market over the foreseeable future.”
Both buildings carry rents significantly below market rate, Gul noted.