A joint venture of Archway Equities and Virtú Investments has acquired The James, a 190-unit Class A Apartment Community in downtown San Jose, California for $74.25 million.
The James represents Archway’s second significant multifamily investment in California and its first in the San Francisco Bay area in the past six months. In May, the firm acquired The Paseos at Montclair North, a 385-unit multifamily community in Southern California’s Inland Empire for $150 million.
“We are beginning to see signs of the bid/ask spread narrowing with more and more sellers meeting the market,” said Archway President Sean Moghavem. “This has created selective opportunities to acquire high-quality assets in supply-constrained coastal markets with strong multifamily fundamentals at prices where we can still generate attractive risk-adjusted returns for our investors despite today’s high interest rate environment.”
“After a multi-year hiatus from acquisitions, we are excited to step off the sidelines for an opportunity to acquire a strong asset at a substantial discount to intrinsic value in a sound market with attractive supply and demand fundamentals. We hope this is the first of many such transactions as we begin whole heartedly deploying capital into late 2023 and on into 2024,” added Virtú Investments Principal Michael Green.
The James is located at 98 N. First Street in downtown San Jose which is a rapidly evolving urban core home to major employers such as Adobe, Zoom, PWC and Deloitte. In addition to more than 200,000 high paying jobs within a three-mile radius, The James is served by a complete network of rail mass transit, including VTA light rail, Amtrak, Caltrain, and a future BART station across the street from the property providing residents with access to the major employment hubs throughout the San Francisco Bay Area. The area’s burgeoning social scene is highlighted by San Pedro Square Market, the area’s most popular dining, nightlife and shopping destination, which is within walking distance from the James.
Built in 2019, the James is a six-story pedestal-style building offering a mix of studio, one- and two-bedroom luxury apartment homes built over 7,256 square feet of street level retail and a 251-space subterranean garage. Common area amenities include a fully equipped fitness center, resort-style pool, resident clubhouse, conference rooms, dog washing station, outdoor meeting areas with barbecues and fire pits, and bike storage facility. The property was 95% leased at closing.
“We are believers in the recovery of the South Bay as we expect more workers to return to the office which will only strengthen the demand for well-located, high quality rental housing, added Archway Managing Director Sankeerth Pulusani. “This was validated during our escrow, as notable tech employers including Zoom announced return to office mandates. Working alongside a local experienced partner like Virtú, we feel it’s an opportune time to enter the San Jose market, which we feel will bounce back faster than many of the other Bay area submarkets.”
Virtú Investments, a fully integrated multifamily investment firm will manage the property through its property management division North Coast. The acquisition was financed by Freddie Mac arranged by Brian Eisendrath of Institutional Property Advisors. The property was marketed by the Berkadia team of Brett Betzler, Kaohu Berg-Hee and Rachel Parsons on behalf of the seller, Fairfield.
