BRE Properties, Inc. (NYSE:BRE) today provided the following update on its recent investment activity:
  • On August 20, 2010, the company acquired 2.4 acres of land in downtown Sunnyvale, Calif. for approximately $19 million. The site will support the future development of 280 units.
  • On August 31, 2010, the company acquired Aqua Marina del Rey, a 500-unit property in Marina del Rey, Calif., for a purchase price of approximately $166 million.
  • On August 31, 2010, the company completed the sale of Boulder Creek, a 264-unit property in Riverside, Calif., for approximately $24.6 million, with an expected gain on sale of approximately $7.8 million.

“The acquisition of Aqua Marina del Rey and the purchase of the Sunnyvale land parcel gives BRE a valuable presence in two of California’s most desirable, high barrier-to-entry submarkets with little developable land and limited new supply,” said Stephen C. Dominiak, BRE’s executive vice president, chief investment officer. “With its proximity to BRE’s Alessio community and easy access to employment centers and recreational areas, Aqua will afford us economies of scale, and provide a convenient, centrally located home for our customers in West Los Angeles. The Sunnyvale land parcel is a transit-oriented site centrally located in downtown Sunnyvale. The parcel is within one block of the CalTrain station and adjacent to the Sunnyvale Town Center, which includes a Macy’s department store, a newly constructed Target and Sunnyvale’s historic Murphy Street retail/dining district. The two investments, in conjunction with the sale of Boulder Creek in the Inland Empire, are in keeping with BRE’s strategy to weight its capital investment in coastal California locations.”

Aqua Marina del Rey, which was built in 2001, comprises two podium buildings with four stories of residential units over two levels of parking on 5.81 acres. BRE plans to invest additional capital over the next three years to renovate the community. The property was previously owned under a leasehold structure. BRE successfully negotiated the merger of the ground lessor’s and ground lessee’s interest to acquire the asset on a fee-simple basis. The initial year-one capitalization rate on the purchase price is approximately 4.6%. After completion of the renovation, BRE expects to achieve a stabilized capitalization rate of approximately 5.3%. The $166 million purchase price represents a cost of $332,000 per unit, and is below estimated replacement cost.

The Marina del Rey submarket is close to major employment centers in Santa Monica, Los Angeles’ Westside, Century City, Howard Hughes Center, L.A. International Airport and El Segundo. In addition, the nearby Playa Vista development, which is approved for 3.3 million square feet of office space, is home to Electronic Arts, the University of Southern California Institute for Creative Technologies and Belkin International, Inc.

The Sunnyvale land parcel further enhances BRE’s presence in the Silicon Valley. In addition to the newly acquired Sunnyvale site, the company currently has three operating communities and one land parcel in the region. The company has made no decision at this time about the construction start date. The development remains subject to customary entitlement approvals.

Sales proceeds from the disposition of the Riverside property will be used to finance, in part, the acquisitions in Marina del Rey and Sunnyvale. The balance of the investment activity was funded with proceeds from the company’s revolving credit facility. No debt was assumed in conjunction with either the Aqua or Sunnyvale transactions.

Year to date, BRE has acquired four operating communities (two in Southern California and two in the San Francisco Bay area), totaling 1,037 units, and one land parcel at a total acquisition cost of approximately $312 million.

About BRE Properties

BRE Properties, based in San Francisco, Calif., owns and manages apartment communities convenient to its residents’ work, shopping, entertainment and transit in supply-constrained Western U.S. markets. BRE directly owns and operates 75 apartment communities totaling 21,604 units in California, Arizona and Washington. The company invests in communities through acquisition and development, and currently has five properties in various stages of development and construction, totaling 1,568 units and joint-venture interests in 13 additional apartment communities, totaling 4,080 units. BRE Properties is a real estate investment trust (REIT) listed in the S&P MidCap 400 Index. For more information on BRE Properties, please visit our website at (Property data as of 6/30/10)

Copyright Business Wire 2010