Like many companies, Pacific Urban Investors relies on internal metrics to guide investment decisions.
The Palo Alto, California-based apartment owner utilizes an internal research ranking of markets and submarkets. Out of a number of variables, job density and overall employment health carry the most weight for Pacific Urban. The firm also values low crime scores, proximity to retail and lifestyle attractions and favorable long-term rental performance.
When all those factors are considered, San Diego comes out as the company’s top national market and La Jolla is among its highest-rated submarkets. With those preferences, it's easy to see why the company coveted the 400-unit La Jolla International Gardens property in the La Jolla/University Town Center submarket of San Diego, where the University of California at San Diego’s research ecosystem sits.
“The jobs-to-households ratio in the area is over six to one, several times the national average, driven by the highly desirable bioscience employment base in the neighborhood,” Rory Gardner, president of Pacific Urban, told Multifamily Dive.
After purchasing the property in April, Pacific Urban changed the community’s name to Allina La Jolla. In addition to location, the company was attracted to the property’s highly desirable floor plans, walk-in closets in each bedroom, vaulted ceilings with skylights in top-floor units, elevated parking ratio and amenities.
Pacific Urban plans to modernize those amenities, which include a resort-style pool and spa, clubhouse, business center, modern fitness center, sand volleyball court and barbecue area.
“Our initial focus on the property will be to ensure that building systems, some of which are approaching the end of their useful life, are revitalized and positioned for our long-term ownership,” Gardner said. “Our team has also developed a plan to enhance the common areas and amenity spaces. Finally, upon natural turnover of the units, we plan to renovate interiors.”
Sourcing debt for the property, built in 1986, wasn’t difficult, according to Gardner. “The highly desirable nature of the community and area coupled with the lower leverage nature of our strategy resulted in strong interest from lenders,” he said.
Allina La Jolla won’t be Pacific Urban’s last purchase this year. Seeing continued strong fundamentals despite some pockets of new supply, the company plans to be an active buyer in the second half of 2023. That means its investment team will continue to build relationships with property owners in its target submarkets.
“Interest rate-driven dislocation in the investment market has provided a desirable point of entry with respect to pricing for those opportunities that are available,” Gardner said. “We have a significant amount of equity to deploy and view the current environment as very desirable to grow our portfolio.”
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