While the COVID-19 pandemic has impacted California’s gateway cities, Chicago-based Waterton is confident in the long-term fundamentals for multifamily in the state and started the year strong with the acquisitions of three multifamily communities: eaves Diamond Heights in San Francisco, The Vue in San Pedro, and OLiVE DTLA in Los Angeles.
The purchase of eaves Diamond Heights is the national real estate investor and operator’s first foray into San Francisco. The community is in the desirable Noe Valley neighborhood and will be rebranded as Delphine on Diamond. Built in 1972, it includes 154 units with one-, two-, and three-bedroom units across two podium buildings with subterranean parking.
“Delphine on Diamond represent a strong relative value for residents priced out of the single-family home market,” said Peter Kuzma, senior vice president of acquisition at Waterton. “As market conditions continue to evolve as we emerge from the pandemic, Noe Valley will remain one of the most popular neighborhoods in the San Francisco metro with its beautiful views and convenient access to public transportation, major highways, and job centers. We plan to leverage our design and construction expertise to update the units, amenities, and outdoor spaces creating a desirable product at an attainable price point for San Francisco’s median-income earners.”
A propertywide renovation is planned, including new siding and windows, landscaping, mechanical upgrades, and improvements to hallways, common areas, and amenities. The units also will be updated with new light fixtures, carpeting, faux wood flooring, cabinets, solid-surface countertops, and modern plumbing fixtures.
“Despite current headwinds, San Francisco’s long-term rent growth expectations remain strong,” said Kuzma. “The long-term fundamentals for San Francisco will continue to draw job creators as a top global technology hub with stable employment forecasts and one of the most educated population bases in the country.”
In downtown Los Angeles, Waterton has purchased OLiVE DTLA, a seven-story mid-rise community that was built in 2017. The property features 293 units with studio, one-, and two-bedroom floor plans and a robust suite of amenities, including a seventh-floor courtyard with a resort-style pool area with a sundeck, a fire pit, and grilling stations as well as a business center, a fitness facility, and an on-site pet park.
“OLiVE DTLA is a well-designed, well-amenitized community in the desirable South Park neighborhood of DTLA,” said Kuzma. “We believe the diversified economy and business presence will continue to attract an affluent and educated renter base, and the community will provide that sought-after ‘live-work-play’ rental experience when COVID-19 vaccines allow for more normalized lifestyles.”
The firm plans to bring the resident offerings more in line with competing rental properties in the area by converting 2,400 square feet of retail space into 110 resident storage units and adding improved in-unit technology access.
“This asset is in excellent physical condition, making it an attractive rental option in the heart of the city,” added Kuzma. “While the pandemic has caused near-term softness in the Los Angeles market, long-term fundamentals remain strong as downtown Los Angeles continues to benefit from outsized population, employment, and cultural growth.”
The third acquisition is providing a solid value-add opportunity for the firm. The Vue is a 16-story rental community in San Pedro that was originally built in 2008 as a condominium property. It features 318 one-, two-, and three-bedroom apartment homes, of which Waterton is acquiring 310 units in the fractured condo community.
“The property, with its waterfront location and stunning views, presented an opportunity well suited for our value-add strategy,” said Kuzma. “Our design and construction expertise will breathe new life into the residences and common areas at The Vue. And the nearby West Harbor redevelopment of the former San Pedro Public Market and waterfront district will serve to support job growth in the area, creating a renewed energy.”
The units boast condo-quality floor plans, averaging 1,3045 square feet with large living space and bedrooms as well as 9-foot ceilings and floor-to-ceiling windows. Waterton plans to renovate units with stainless steel appliances, updated plumbing fixtures, tile backsplashes, new cabinet fronts, quartz countertops, new lighting fixtures, faux wood vinyl plank flooring, and full-size washers and dryers. The firm also will upgrade the lobby and common areas and make cosmetic improvements to the existing amenities.