Corte Bella represents TruAmerica’s third investment overall in Orange County and ninth investment overall in 2018. The property is located in one of Orange County’s most dynamic submarkets. Fountain Valley is a highly desirable submarket due its strong demographics and apartment fundamentals. The average household income is $112,000 and the median home value is $800,000. Home sales within a half mile of the Property have ranged from $846k to $1.5M in the past year. The Fountain Valley/Huntington Beach submarket 5-year average vacancy rate is projected to be 3.90%, which is 56 bps lower than Orange County’s average (4.46%), 76 bps lower than the West’s average (4.66%), and 132 bps lower than the U.S.’s average (5.22%).
Corte Bella presents a compelling opportunity as the seller performed a light renovation program more than a decade ago. Furthermore, the Fountain Valley/Huntington Beach submarket has a severe shortage of modern housing. Approximately 67% of the units in this submarket were constructed prior to 1980. The last market rate multifamily community with 100 or more units was built in 1987 and only 3,700 units have been built within the past 40 years. There is virtually no apartment development in the Fountain Valley/Huntington Beach submarket pipeline for the foreseeable future.
TruAmerica plans to bring all apartments to a fully renovated status in order to close the wide rental gap between apartments built prior to 1980 and after 2010 in the Fountain Valley/Huntington Beach submarket.
Corte Bella is a 251-unit garden-style multifamily community built in 1969. The property features a unit mix comprised of one-bedroom units (60%) and two-bedroom units (40%) with floorplans at an average unit size of 848 square feet. All of the units have private patios or balconies, heat/air conditioning, ceiling fans in the dining rooms, oversized windows, and microwaves, while select units have vaulted ceilings with sunlight windows. Every unit comes with a private detached garage, a rare and attractive amenity not found at any other asset in the immediate submarket. Corte Bella also features a broad array of community amenities which includes seven swimming pools, a fitness center, a dog park, outdoor fireplaces, barbeque grills, picnic tables, and nine laundry facilities.
Corte Bella enjoys an outstanding location as it is adjacent to Interstate 405, which allows residents to reach almost 200,000 jobs and major retail centers in Orange County, such as Bella Terra, Pacific City, South Coast Plaza, and the Irvine Spectrum, within twenty minutes. The property is part of an excellent school district as the elementary, middle, and high school were all rated a 10 out of 10 per Great Schools. Plavan Elementary ranked better than 91.8% of all elementary schools in California, while Fulton Middle School is a California Ribbon School. Fountain Valley High School is across the street from Corte Bella and has earned silver distinction per U.S. News and World Report.
Corte Bella represents a strong value-add opportunity as the seller upgraded all units with laminate countertops, white appliances, vinyl-roll flooring in the wet areas, and espresso cabinets in 2007. TruAmerica’s interior renovation program will implement new faux stainless steel appliances, lowered quartz countertops with undermount sinks, vinyl plank flooring in the common areas, carpet in the bedrooms, cabinet fronts and hardware, blinds, and lighting and plumbing fixtures in all apartments. In addition, TruAmerica will install washer/dryer connections and appliances in all apartments. TruAmerica will also upgrade the community amenities and exteriors by enhancing the pool areas, leasing office, fitness center, landscaping, signage, paint, and curing deferred maintenance items.
The property is located about 2.4 miles east of Pacific Shores, the 264-unit property TruAmerica recently acquired in 1Q 2018. Pacific Shores is located in Huntington Beach, CA and of similar vintage (1970) to Corte Bella. Corte Bella provides an opportunity to achieve synergy through economies of scale with Pacific Shores due its close proximity and by utilizing the same third-party property manager (Greystar).