Thursday, August 25, 2016

IEC Acquires Value-Add Multifamily Asset in Silicon Valley, CA for $46 Million

555 Apartments, formerly Meritage Apartments, Milpitas, CA

Marshall Boyd
Los Altos, CA – Institutional fund manager Interstate Equities Corporation (IEC) has acquired a 137-unit, value-add multifamily property in Milpitas for $46 million.

The property, formerly called Meritage Apartments, will be rebranded to “555 Apartments.” The asset was acquired through IEC Institutional Fund III, L.P., a fully discretionary, $200 million commingled fund that closed earlier this year.

“Despite being net sellers, we have been actively acquiring assets that meet our investment criteria over the past few months, and this acquisition brings our total equity committed to roughly fifteen percent,” says Marshall Boyd, Co-President of IEC, who notes that this translates to an additional $600m of buying power in this fund which will be deployed over the next several years.

“While we continue to expand our multifamily portfolio, we are also taking a selective approach to new acquisitions,” says Boyd. “Our investment strategy is to target unrenovated or partially renovated apartment communities consisting of 20 to 400 units, located in coastal infill markets that are demonstrating steady growth and are resilient to economic pressures.

“By adhering to this thesis, we are able to deliver attractive returns to our limited partners.”

Boyd notes that Milpitas is a prime example of a market in Santa Clara County that is poised for economic growth, adding that technology sector job growth and a new BART station make this a fundamentally durable location for multifamily investments.

Julia Boyd Corso
“Milpitas is a dynamic submarket that is gaining ascendancy in the Bay Area,” explains Boyd. 

“Situated between the East Bay and Silicon Valley, Milpitas is uniquely positioned to cater to the increasing demand for quality housing near major tech employers in both regions.

“The rising employment growth in this market, coupled with the availability of mass transit options linking both Fremont and San Jose will drive resident demand for this asset.”

Julia Boyd Corso, Co-President of IEC, notes that the strength of the market and the asset’s value-add potential resulted in strong competition for this acquisition.

“There were a number of bidders for this asset,” explains Boyd Corso. “As the only discretionary capital, we were able to differentiate ourselves through surety of close. 

"In addition, our familiarity with this market and product type enabled us to emerge as the right buyer.”

Built in 1973, “555 Apartments” will undergo a series of capital improvements as part of IEC’s value-add investment strategy. 

“We can substantially increase rents through operational improvements, rebranding, and management efficiencies,” says Boyd Corso.  “By revitalizing the property, we are improving quality of life for current residents and delivering a product that will attract renters throughout the Bay Area.”

Salvatore Saglimbeni

Salvatore Saglimbeni, Stanford Jones, and Philip Saglimbeni of Institutional Property Advisors, as well as Carlos Azucena of Marcus and Millichap brokered the transaction. 

In addition to the Milpitas asset, IEC has acquired four value-add multifamily properties throughout Northern and Southern California through IEC Institutional Fund III, L.P., bringing the total number of units acquired for this fund to date to 240.

For a complete copy of the company’s news release, please contact:

Katie Kea or Jenn Quader
 Brower, Miller & Cole
 (949) 955-7940