Dealmaker: Interstate Equities Acquires San Diego-Area Apartments for $34M

Interstate Equities Corp. Los Altos, Calif., acquired Verse La Mesa, a 133-unit apartment community in suburban San Diego, for $33.95 million.

The institutional fund manager plans to renovate the 1976-vintage property and re-brand it as The Cove.

Berkadia Managing Directors Shane Shafer, Ed Rosen, John Chu and Director Kyle Pinkalla brokered the transaction. Berkadia Managing Director David Bleiweiss placed the debt.

IEC Co-President and Chief Investment Officer Marshall Boyd said his firm specializes in acquiring unrenovated or partially renovated assets in coastal California infill markets.

Boyd said La Mesa is home to more than 59,000 residents. “La Mesa is gaining ascendancy within the San Diego market,” he said, noting median household income is expected to increase 10.7 percent by 2021. The property is 15 minutes from downtown San Diego and close to San Diego State University, which enrolls more than 33,000 students.

Brendan Gibney, Senior Acquisitions Associate with IEC, said the property’s central location and affordable rents relative to other San Diego submarkets will drive future demand. He said current in-place rental rates are below market for comparable La Mesa properties and noted IEC will position the community as a more affordable option compared to Class A apartments in the market.

The 96-percent occupied property includes 84 one-bedroom units, 44 two-bedroom units and five three-bedrooms units.