The recent sale of The Alexander apartments in South Reno for $55.3 million, or $158,000 per door, is the highest price per door ever paid for an apartment community in the Reno-Sparks market.
The previous benchmark was set in 2005, when The Vintage apartment/condominium community on South Meadows Parkway sold for $58 million, or $157,609 per door.
AG Spanos Companies of Stockton built the 350-unit Alexander complex in 2009 and held onto it for several years waiting for market conditions to improve, says Ken Blomsterberg, first vice president of investments with Marcus & Millichap. Blomsterberg Group and Jones-Saglimbeni Group of Marcus & Millichap’s Palo Alto office represented AG Spanos Companies and the buyer, RPM Company of Lodi, in transaction negotiations.
It’s the second regional purchase for RPM Company, which acquired the 308-unit The View apartment community at Selmi Drive in September of 2012 for $35 million. RPM Company is managing both assets. RPM Company sold a three-property portfolio in Southern California and did a 1031 tax-deferred exchange to trade into The Alexander deal.
Donnie Garibaldi, principal with RPM Company, says Reno continues to be a more attractive market for multi-family investments for his group at this time than Central California, the Sacramento Valley and greater San Francisco Bay Area.
“No doubt about it we paid top dollar for The Alexander, but it is a great asset in a good location, and it it’s something we can own for the next 20 years and be happy with,” Garibaldi says.
Garibaldi says RPM’s focus is on acquiring and managing assets in northern Nevada and Northern California. He first came across The View when his daughter, a student at University of Nevada, Reno, looked at renting an apartment there.
“At this point all our acquisitions are in Northern California and northern Nevada, where we can get in our cars, drive to whatever asset we have and drive home that same day,” Garibaldi says.
“The View turned out to be a good acquisition,” he adds. “These days, if you are going to buy a nice, large, well-built and newer property, you will pay top dollar for it. You just have to figure out where it is you want to do that for the long term, and we feel good about the (Reno) market.”
Blomsterberg says The Alexander deal is yet another sign that investors who typically shop in core markets such as San Diego, San Francisco, Seattle and other large western cities continue to seek deals in Reno-Sparks because of the potential for higher returns on investment capital. The Alexander, which is running about 97 percent occupancy, sold at a 5.65 percent cap rate.
Favorable financing terms also are helping close large transactions, Blomsterberg adds.
“What is attracting a lot of investors to the Reno market is the question of whether they would like to be in core markets where they get a nice property but not the same value and returns. Reno is more of a tertiary market for investors, but if they are coming from core markets they can get good financing and cap rate.”
