Ok, Equity Residential: it’s Pacific Place Apartments!

As you know, we keep tabs on many public companies through news reports and, more importantly, their SEC filings. Some companies take the word “public” seriously and we really appreciate it. And some companies – while having no problems raising money publicly – have very distorted understanding of what it means to be public. Example #1: Equity Residential (NYSE: EQR).

We are sure there are probably guidelines of what they are absolutely required to disclose publicly, e.g. information that meets the “material” threshold. However, in the $23 billion behemoth that its EQR, which typically likes to gobble new assets in portfolio acquisitions of a few billion dollars, we understand that they can have a very different view of when a $143 million transaction is material or not. Such was the case in their very cryptic Q1’2014 earnings release and earnings call about a 430-unit Los Angeles property. We, however, think this transaction was substantial enough that EQR ought to disclose it more properly… and openly!

Surprisingly, as far as we were able to establish after a multi-hour Internet search, nobody was able to pierce EQR’s secrecy vail. So, we had to put our Dr. Watson hats and get to the bottom of this: it’s Pacific Place Apartments at 5211 Pacific Concourse Drive in Los Angeles near LAX.

Sometime in January or February 2014, EQR bought the 430-unit at the corner of La Cienega Blvd and Pacific Concourse Drive for $143 million and a capitalization (cap) rate of 4.9%. This works out to approximately $333,000 per unit, which is below the $409,000 per unit average for multifamily sales OpenComp’s tracked for the first quarter of 2014, but above the $324,000 per unit average for 2013. The cap rate was at exactly the 2013 average level but above Q1 level of 4.2%.

The property was developed by Nexus Properties in 2008 and was managed by Nexus’ management affiliate, Windstar Communities. Cornerstone Real Estate Advisors provided the equity for the development.

The apartment building features two, five-story buildings containing approximately 390,000 rentable square feet and 430 apartment units. The unit mix consist of 56 studios, 215 one-bedroom units, 149 two-bedroom units and 10 three-bedroom units. There are two underground garages, each with two levels. This luxury apartment community features a fully-amenitized common area, movie theatre, clubhouse and exercise facility and two swimming pools.

Mystery solved. We do hope, however, that Equity Residential will consider being a little more “public” regarding their past and future acquisitions and dispositions for the benefit of all (the public)! (queue music from local TV news reporter segments with the words: “Shame, shame, shame!”)

See Pacific Place Apartments comp.