Dealmaker: Decron Properties, Sequoia Swap Properties in $193M Deal

Decron Properties traded a Sacramento, Calif. multifamily property and cash to Sequoia Equities in a direct exchange for a two-property Simi Valley, Calif. apartment portfolio in a transaction valued at $193 million.

Decron Properties, Los Angeles, traded 264-unit Broadstone at Strawberry Creek to Sequoia Equities, Walnut Creek, Calif., for 372-unit The Villas and the 132-unit Overlook in the Wood Ranch master planned community.

“A direct exchange is highly unusual and had never been executed by either Decron or Sequoia and a lot of pieces needed to fall into place in order for this transaction to occur,” said Decron Vice President of Acquisitions & Finance Daniel Nagel. “When we learned that Sequoia Equities was as interested in our Sacramento property as we were in their Simi Valley portfolio, we asked the brokers to find a creative way for both companies to achieve their business goals at a time where deal volume has slowed significantly and inventory has become extremely limited.”

The transaction, which closed in less than 70 days, required more than 15 lawyers across five law firms.

Institutional Property Advisors represented both parties in their respective sales. IPA Executive Managing Director Greg Harris said the Simi Valley/Moorpark submarket multifamily inventory totals only 6,523 units serving a population exceeding 162,000. Only 102 of the 702 units in the construction pipeline are entitled. Stan Jones, Philip Saglimbeni, Salvatore Saglimbeni, Kevin Green and Joseph Grabiec also represented Decron and Sequoia Equities in the transaction.

Together The Villas and Overlook represent the largest multifamily asset in Simi Valley, a bedroom community 45 miles northeast of downtown Los Angeles. Both properties date to 1986 and cater to young working professionals priced out of home ownership in the Ventura County neighborhood where median home prices equal $762,000.

“The Ventura County economy continues to be driven by strong job growth in high-tech, clean energy and healthcare,” Harris said. He noted that educated professionals are migrating to the area from Los Angeles and beyond for the jobs, schools and quality of life, but said they struggle to find quality affordable housing options difficult in one of the most supply-constrained multifamily markets in southern California. “The confluence of demand drivers and limited supply creates a compelling value-add story,” he said.

Broadstone at Strawberry Creek was Decron’s first investment in northern California when it acquired the property in 2012. “While Sacramento continues to boast sound market fundamentals for multifamily investment, we were operating inefficiently because we only had one asset in the submarket,” Nagel said. “The equity from the sale of Broadstone is being deployed to meet our current strategic focus in more core California markets adjacent to major employment centers.”