Essex Property Trust Buys Peninsula Apartments

Essex Property Trust is on a Bay Area shopping spree, buying three Peninsula apartment complexes so far this year, while selling off two in Southern California.

The San Mateo-based real estate investment trust has spent a whopping $345.5 million on 619 units on the Peninsula so far this year, while also selling off 605 SoCal units — the 255-unit Highridge in Rancho Palos Verdes in February and the 350-unit Essex Skyline in Santa Ana on April 2 — for $366.6 million. The deals got Essex more units for less money: the Southern California properties sold for an average of $606,000 per unit while the Northern California properties cost the firm an average of $546,000 per unit.

Essex bought the 307-unit Plaza in Foster City from Northwestern Mutual Life for $161.4 million in January and followed that up with two other major buys from Cityview that both closed on March 3, according to San Mateo County records. The 146-unit Elan Menlo Park sold for $78.8 million and 166-unit One Hundred Grand in Foster City sold for $105.3 million. Both were the result of a partnership between Greystar and Cityview, as was the 164-unit Elan Mountain View complex that Essex bought for $101 million last May, renaming it ARLO Mountain View. Elan Menlo Park has been renamed ROEN Menlo Park.

Cityview did not reply to a request for comment on the sales. Essex also did not reply to a request for comment. But in a statement about its recent transaction activity, the publicly traded company said the results were a “reallocation” toward Northern California, where it expects “lower supply and higher rent growth over the foreseeable future.” It also said the activity would be a net neutral for its cash flow.

“The newly acquired properties will seamlessly integrate into our existing property collections operating model, further optimizing our operating platform and generating additional yield for our investors,” Essex President and CEO Angela Kleiman said in a statement.

The firm also noted that it was selling off older properties in exchange for newer communities. The Rancho Palos Verdes property was built in 1972, while the Santa Ana property was built in 2008. The three Peninsula properties were all built between 2013 and 2017.

The Peninsula and Silicon Valley rental markets have been on a major upswing, according to data from rental listing site Zumper. In March, Menlo Park had both the Bay Area’s highest rent and biggest rent increase at a median of $3,290 a month for a one-bedroom and $4,500 a month for two bedrooms, which represents an over 30 percent year-over-year increase for both unit types. One- and two-bedroom apartments in Campbell were up 20 percent year over year and Palo Alto one-bedrooms were up 15 percent, according to Zumper data.