Vista Investment Group Enters San Diego Market With $19M La Mesa Multifamily Acquisition
Vista Investment Group has acquired the 80-unit La Mesa Palms multifamily community at 4300 Echo Court for $18.97M, marking the Los Angeles-based real estate investment firm’s entry into the San Diego market. The seller was a private family investor that had owned the property for more than 40 years. The property was 92.5% occupied at the time of closing.
“San Diego is one of the most fundamentally sound multifamily markets in the nation and we have been waiting for the right opportunity to enter the market,” said Vista president Jonathan Barach. “The La Mesa/Spring Valley submarket is one of the more affordable rental submarkets in [the] region with great school districts, good freeway and mass transit options, and easy access to major employment centers." He said the firm would continue to seek well-located multifamily assets with strong upside potential in the $10M to $50M range.
The garden-style apartment complex consists of 20 four-plex buildings with spacious two- and three-bedroom units that average 1,100 SF. Considering the low in-place rents, large unit sizes and location, the project has upside potential and represents an excellent value-add opportunity, Barach said. “The previous owner has been an excellent steward of the property, but little has been done to improve the asset to stay current with market trends,” he said. “We believe we can add significant value with a thoughtful renovation and professional management.”
Vista will implement a multimillion-dollar capital improvement program, including upgrading the buildings’ exteriors and grounds, and interior renovation of vacant units, according to Barach. Unit upgrades will include quartz countertops, vinyl wood plank flooring and stainless steel appliances. Other units will be renovated as turnover permits.
The property’s central county location and proximity to four freeways and the San Diego Metropolitan Transit System’s Orange and Green trolley lines makes it accessible to employment centers throughout the region, including Downtown San Diego, Mission Valley, East County and Kearny Mesa. “La Mesa Palms presented the unique opportunity for a new owner to capitalize on abnormally large, unrenovated units in a low-density setting,” said Holliday Fenoglio Fowler director Hunter Combs, who led the team that marketed the asset and repped both parties. “Downtown La Mesa is in the midst of a dramatic revamp that we are seeing exert upward pressure on demand for renovated and new construction apartment units in the area, with rental rate growth comparable to several of San Diego’s hottest submarkets."
Vista’s acquisition was leveraged with a $13.05M, 30-year loan from Chase Commercial Mortgage Lending arranged by HFF’s debt placement team, led by directors Marc Schillinger and Zach Koucos.