3.8% HUD Loan Assumption Attracts 10+ Bidders for $26.6 Million Modesto Apartment Sale
A Southern California family office made its first Modesto multifamily acquisition by purchasing the 100-unit Marc at 1600 for $26.6 million through a 1031 exchange.
The buyer was one of more than 10 bidders for the property, which was marketed by The Mogharebi Group (TMG) of Costa Mesa, CA, on behalf of seller Tesseract Capital Group.
“The assumable HUD loan had a 3.8% rate, which was very appealing to buyers in the current interest rate environment,” TMG’s Senior Vice President, Nazli Santana, told ApartmentBuildings.com.
However, the buyer had no previous experience with a HUD loan assumption.
“Our focus from start to finish was closely guiding them through the federal approval process and keeping communication clear to reach a successful closing,” Santana said.
San Francisco-based Tesseract Capital had owned the 1980s-built property at 1600 Standiford Ave. since 2020. During its hold, the San Francisco seller renovated most of the property’s interiors, exteriors and common areas.
“The buyer’s goal is to integrate administrative, financial and operational systems to reduce expenses for optimal long-term growth, while providing a smooth, seamless system for tenants,” Santana said.
The sale also reflected the economics of Modesto’s multifamily market. Santana said that rents have increased by 5% over the past three years, while the market’s 4.9% is below the national average.
“Modesto has had steady population growth over the past decade and remains a low-cost alternative to the Bay Area,” she added.
The Marc was 98% occupied at closing, with average rents of $1,925 and some additional rent upside, according to TMG. The property has one- and two-bedroom units averaging 798 square feet. On-site amenities include a fitness center, pool, spa/hot tub, gated access, and Amazon lockers.
Santana said that the buyer isn’t currently seeking additional properties in the Modesto area, although it may consider future acquisitions. Tesseract Capital owns three additional properties in the city.
Photo: The Marc at 1600, courtesy of The Mogharebi Group
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Remax Professionals
Re/Max Real Estate Professionals | New York
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Jared Ennis
Central CA Commercial | California
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Rick Recckio
Recckio Real Estate & Development
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Eamonn McConnell
Avison Young - CA - ON - Greater Toronto
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Essex Property Trust, Inc.
California
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Josh A
California
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Bob Tuteur
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Andrew Schildcrout