SAN JOSE — A big San Jose apartment complex has been bought for over $70 million in a deal that hints at a wobbly market for multifamily real estate and a tricky economy for property investors.
Moreland Apartments, a multifamily property at 4375 Payne Avenue in San Jose, was bought for $71 million, according to documents filed on June 13 with the Santa Clara County Recorder’s Office.
The San Jose apartment property totals 160 units, which indicates a value of $433,750 a unit. Moreland Apartments was built in 1982.
San Francisco-based Reliant Group, acting through an affiliate, bought Moreland Apartments, according to the county public documents.
The value was on the low end of apartment purchases in the Bay Area within the last nine months, a review of transactions with multifamily properties shows.
Here are a few examples of what investors have been paying on a per-unit basis in recent deals:
— Southwood apartments in Palo Alto, 100 units. The price was $59.9 million, or $599,000 a unit.
— The Rise in downtown Walnut Creek, 97 units. The price was $57 million, or $587,600 a unit.
— Villa del Sol apartments in Sunnyvale, 124 units. The price was $62.3 million, or $502,400 a unit.
— Artists Walk Apartments in Fremont, 185 units. The price was $89.8 million, or $485,000 a unit.
— Diridon West, 249 units in downtown San Jose. The price was $117.5 million, or $471,900 a unit.
— Modera The Alameda in downtown San Jose, 168 units. The price was $78.2 million, or $465,500 a unit.
— The Kensington in Pleasanton, 100 units. The price was $35.5 million, or $355,000 a unit.
Except for the Sunnyvale apartments deal that occurred in November 2023 and the Fremont apartments deal in September 2023, the examples all involve transactions that occurred in 2024.
Despite the recent softening of per-unit-values for apartment transactions during the last nine months, prices for multifamily complexes are very much in line with price trends before the spikes in inflation and interest rates over the last year or two.
Before the upward surge for interest rates and inflation, here are examples of some per-unit prices:
— The Village Residences in Mountain View, bought in 2019 for a jaw-dropping $963,700 per unit. This $292 million deal for the 333-unit complex was completed in 2019.
— The Platform Urban Apartments in San Jose, 551 units, bought in 2022 for $320 million, or $580,760 a unit.
— The Eleanor apartments in Milpitas, 193 units, bought in 2022 for $333 million, or $579,580 a unit.
— Sofi Waterford Park apartments in San Jose, 432 units, bought in 2020 for $194 million, or $449,070 a unit.
— The Lex apartments in San Jose, 387 units, bought in 2019 for $180.5 million, or $466,408 a unit.
— Park Hacienda in Pleasanton, 540 units, bought in 2020 for $248 million, or $459,260 a unit.
— An 18-story Oakland apartment tower at 1130 Third Avenue, 178 units, bought in 2022 for $55.5 million, or $311,800 a unit.
With interest rates rising, apartment buyers find it tougher to justify purchases unless the prices are sufficiently low for the residential complexes.
The new owner of Moreland Apartments in San Jose, Reliant Group, specializes in market-rate and affordable apartments, according to the real estate firm’s website.
Reliant Group’s affiliate obtained $73.9 million in financing at the time of its purchase of Moreland Apartments, the county records show. This included $60.4 million from Citibank and $13.5 million from Reliant Cap X.
