Touted as the largest multifamily transaction in Southern California to close so far this year, real estate investment firm Archway Equities has acquired the 385-unit The Paseos at Montclair North from 4914 Olive Street Properties for $150 million.
For Archway, which has been focused primarily on multifamily investments since 2010, the latest acquisition represents its first multifamily investment in California. It has more than $1 billion in commercial real estate assets under management, including 5,000 apartments across the Sun Belt.
“Somewhere along the way, cap rates between the Sun Belt and coastal markets inverted, and select pockets of Southern California should now provide more attractive risk-adjusted returns in the current environment,” said Archway president Sean Moghavem. “We are still very bullish long term on multifamily in the Sun Belt because of its favorable business climate, low cost of living, and continued job and population growth. Having said that, we continue to see aggressive pricing that’s not factoring in short-term headwinds such as supply, rising property taxes, and insurance costs. We’ll always look to grow our Sun Belt portfolio but are also actively seeking opportunities in the Inland Empire, Orange County, and San Diego.”
Archway pointed to CoStar data that this is only the second transaction this year to trade at more than $100 million in Southern California, a market area that includes Los Angeles, Orange, Riverside, Ventura, and San Bernardino counties, and the largest out of 546 deals.
The Paseos at Montclair North is in Montclair, which is at the Inland Empire’s eastern gateway to Los Angeles’ San Gabriel Valley. Its location offers proximity to the rapidly growing Inland Empire economy and prominent Los Angeles employment hubs, according to JLL, which marketed the property for sale on behalf of the seller.
The garden-style community encompasses two full city blocks and features a mix of studio, one-, two-, and three-bedroom Santa Barbara-inspired townhomes built around a central linear park with a concert amphitheater. Residents also have access to two resort-style pool areas with spas and cabanas, a fitness facility with a children’s entertainment suite, a yoga room, a conference center, and an entertainment lounge. At closing, the community was 97% leased.
“With a lot of institutional capital sitting on the sidelines, there are very few firms that would be able to close on a transaction of this size,” added Archway managing director Sankeerth Pulusani. “Consequently, we believe that we were able to acquire the best asset in this submarket.”
Archway assumed the community’s accretive in-place agency loan with five years remaining on the term.
While well maintained, the units have not been significantly updated since the community was developed in 2014. Archway plans to add designer touches to unit interiors, create a co-working space, and reimagine amenity areas in what Pulusani described as a “modest renovation.”
