By Jon Peterson
Chicago-based Nuveen has acquired the 204-unit Joule La Floresta apartment complex in Brea located at 420 La Crescenta Drive. The purchase price was $108.4 million, or $531,000 per unit, according to sources familiar with the sale of the property.
The seller and developer of the property that was completed in 2018 was Houston, Tex.-based Morgan Group, an apartment development company focused on high-growth markets across the US. The Class A property was, stabilized and roughly 97 percent occupied at the time of the sale.
The apartment complex is located within the North Orange County of submarket of the Anaheim-Santa Ana-Irvine standard metropolitan area, which has very strong operating fundamentals. It had annual rental rate growth during the first quarter of 2021 of 2.6 percent, according to sources that track this information. This was well above the market average of 0.6 percent. Out of the 16 submarkets in this region, the North Orange County submarket ranked 2nd for annual effective rent growth for the first quarter of this year.
The asset acquired by Nuveen is centrally located, which provides residents access to nearly every major employment hub in the Los Angeles basin. This would include the counties of Orange, Riverside and Los Angeles. The complex is located within a 30-minute drive to over one million jobs and 120,000 businesses.
Nuveen acquired the property for its U.S. Cities Multifamily Fund. This is an open-ended commingled fund that the manager established in 2019. “The gross asset value of the U.S. Cities Multifamily Fund will be at $1.7 billion once a transaction in July has closed,” says Nikita Rao, a portfolio manager for Nuveen. Some of the existing assets in the fund are located in Maryland, Austin, Nashville, Portland and Seattle.
So far, the commingled fund has been buying existing core assets, a strategy that could be changing in the near term. “Once the value of the portfolio nears $2 billion, we will then consider making some non-core investments for the fund. This could be value-add or development multifamily and by investing capital into single-family rental, student and senior housing. The allocation for non-core investing for the fund is up to 25 percent of the fund’s portfolio,” said Rao.
The U.S. Cities Fund has recently received a number of new commitments. This includes a $100 million investment allocation from the State of Wisconsin Investment Board, as stated by the pension fund in a board meeting document. The pension fund expects that the targeted returns for the fund are in the high single digit range.