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New Tahitian Apartments in Isla Vista Changes Ownership

The 63-unit New Tahitian Apartments located at 6739 El Colegio Road in Isla Vista recently sold to a local investor for $14.3 million, marking the largest sale by far of a multifamily property on the South Coast in 2013.

Escrow closed June 13. The transaction is also the largest multifamily sale in Isla Vista since 2010 when the Tropicana Del Norte Apartments sold for more than $37 million.

“Apartments continue to be at the top of many real estate investors’ short list, but opportunities like this in Isla Vista are few and far between,” Radius Commercial Real Estate & Investments founder Steve Golis said.

Golis and Radius agents Brian Johnson and Jon Standring represented the seller of the New Tahitian. The buyer was represented by Evan Bank of Prudential California Realty, Monarch Beach Office.

Golis underscored the Tahitian’s close proximity to UCSB as one of the main selling points for the new owner, Capitoline Properties LLC, a relatively new real estate investments company based in Santa Barbara with an office in Orange County.

“Isla Vista is just a very attractive micro-market,” Golis said. “With UCSB’s large student population in the backyard, and IV’s high population density, second only to Manhattan, IV’s apartment vacancy tends to be among the lowest in California and the nation. That translates to consistent rental income at premium rates, and that gets the attention of investors when a property of this size in this area comes to market.”

“We’re looking to build a portfolio throughout California, especially here in Santa Barbara and the Central Coast,” a representative from Capitoline said. “We seized this opportunity as a long term investment, especially because of its strong value add potential and the strength of the rental and real estate market as a whole.”

Shortly after the recession hit in late 2008, apartments became a hot ticket among investors and interest has remained strong.

“It’s not uncommon to receive numerous offers from qualified buyers, including offers over the asking price, non-contingent and all cash. Apartments offer everything a conservative investor looks for,” said Golis, pointing to historically low vacancy rates (current vacancy in Santa Barbara County is just 0.94 percent according to the most recent Dyer Sheehan survey), attractive financing and a strong rental market.

Because of the popularity of the category, the market has tightened dramatically in the past few years. There have been just 11 multifamily sales in Isla Vista since January 2011 (four in 2013, two in all of 2012 and five total in 2011). There were 14 sales in 2010 alone, 11 in 2009 and 14 in 2008.

“More often than not, commercial properties sell when there is vacancy in the building and owners aren’t generating any income to cover expenses,” Golis said. “There aren’t many apartments on the market right now because many are in a position where their properties are 100 percent leased and they are making money so they have no compelling reason to sell.”

The New Tahitian Apartments was built in 1962 and was branded as the New Tahitian Apartments in 2008 when it underwent an extensive $1.6 million remodel.

“We plan on doing a full landscape as well as renovations to the pools and common areas,” the Capitoline representative noted. “Otherwise the property’s condition is solid as is.”

— Vince Coronado is the director of marketing communications for Radius Commercial Real Estate & Investments.

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