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How An East Bay Multifamily Portfolio Just Sold For $658 Per SF

One of San Francisco's largest landlords has jumped headfirst into Berkeley, snapping up the East Bay city's largest multifamily transaction in over a decade.

2510 Bancroft Way

Ballast Investments took the lion's share of a July portfolio sold by The Prado Group and Jonathan Rose Cos. in its entirety for $105M, or $658 per SF.

The S.F.-based landlord grabbed three properties — 2510 Bancroft Way, 2520 College Ave. and 2500 Durant Ave. — for a combined $83.25M. Oakland-based developer Rev Projects acquired 2340 Telegraph Ave. for the remaining $21.75M and closed in February, according to property records. All 255 units are rent-controlled. 

All four properties are within a few blocks of each other and, crucially, UC Berkeley. Colliers International Senior Vice President Brandon Geraldo represented the buyer and seller with Senior Vice President Ryan Wagner

"This portfolio is unique in that it's mostly students that occupy these units," Geraldo told Bisnow. "You get natural attrition, and the units turn over, which is a huge plus for an owner because you don't have tenants staying in the building for 20 years and paying $700 for a one-bedroom unit."

Three of the four buildings were designated by the city of Berkeley as historically significant, having been built between 1915 and 1920, and none of the four offer opportunities for a level of substantial redevelopment that would exempt them from rent control, according to Geraldo. 

The Berkeley Rent Stabilization Board didn't reply to a request for comment by press time.

2500 Durant Ave.

Rev Projects principal Eric Wang said they have already renovated 35 of the 120 units at the 2340 Telegraph Ave. property. Renovated single units now command rents of about $1,300, and double-bedroom units get about $1,650, compared to prior rates of $750 for those units, Wang said. 

"I chose this one over the others because in my view it was more value-add," Wang said. 

The portfolio's priciest asset, the $36.5M 2510 Bancroft Way, went for $18.5M to an affiliate of Jonathan Rose Cos. in 2011. It currently consists of 46 units and 15K SF of retail occupied by tenants including Chase Bank, Chipotle and Jamba Juice.

Geraldo and Wagner said the portfolio attracted the interest of multiple foreign investors, including one particularly interested Asian group, thanks to Colliers' robust international capital markets program. Ballast Investment didn't reply to a request for comment. 

In addition, the increasing appetite for denser units, especially among students and developers in Berkeley, gives each property significant growth potential via new floor plan possibilities, the brokers said.

Related Topics: Colliers, Jonathan Rose Cos.