TruAmerica sees marginal gain in $96M sale of Huntington Beach apartments

TruAmerica has sold an apartment complex in Huntington Beach for about 6 percent more than it paid for it in 2018, The Real Deal has learned. 

The Century City-based firm sold a 264-unit property at 7752 Warner Avenue for $96 million to Advanced Real Estate Services, an investment firm based in Irvine, according to property records filed with Orange County. Noah Hochman, TruAmerica’s co-chief investment officer, confirmed the sales price in an email, but declined to comment further. 

Advanced paid about $42.6 million in equity and assumed a more than $50 million loan in connection with the acquisition, records show. The deal came out to about $363,000 per unit. 

TruAmerica sold the property for a marginal profit — it spent $90.5 million to buy the apartment complex in 2018, records show. It scored a $55.7 million loan from Berkeley Point Capital, now owned by Newmark, to finance the deal. 

The loan was then sold to Freddie Mac, which securitized it into a commercial mortgage-backed securities, or CMBS, pool, according to Morningstar and loan documents filed with the county. 

With Advanced, which renamed the property Surf House, taking over the loan, TruAmerica is no longer responsible for paying off the debt. 

The property was generally financially healthy, according to data from Morningstar. 

While few borrowers have defaulted on loans tied to multifamily properties, many have struggled with stagnant rent growth and rising debt payments. Most of those struggling are syndicators such as Tides Equities and Rise48, which relied on floating-rate debt to buy apartment complexes when debt was cheap in 2020 and 2021. 

TruAmerica had a fixed interest rate of 4.22 percent on the loan, according to Morningstar, and generated income well above what was needed to service the debt. 

In June, the complex brought in $4.7 million in net cash flow on an annualized basis, up from $4.5 million in September of last year, but down from a peak of $8.9 million in June 2022. 

TruAmerica still wants a grip on Orange County. Last month, the firm bought a 264-unit complex at 1901 East 1st Street in Santa Ana for nearly $103 million, according to a release.