The corporation that was probably Berkeley’s second-largest landlord has passed the torch to another major developer — or sold the torch — to the tune of a reported $180 million.
Equity Residential, based in Chicago, recently sold six Berkeley student housing developments with 343 units to The Dinerstein Companies (TDC) of Houston, Texas.
The sale was completed last month.
“We’re really excited about this acquisition,” said Josh Vasbinder, west coast partner of Dinerstein, which specializes in student and multi-family housing.
“We really like both the short- and long-term fundamentals within the city of Berkeley and the University of California, Berkeley. We have been trying to get into this submarket for a couple of years so we’re excited to finally be able to have a presence.”
The sale includes the Gaia Building at 2116 Allston Way; Berkeleyan Apartments at 1910 Oxford; Renaissance Villa at 1627 University Ave.; ARTech Building at 2002 Addison St.; the Touriel Building at 2004 University Ave; and the Fine Arts Building at 2110 Haste St.
The housing group is being rebranded the Sterling Berkeley Collection, which includes new names, all of which start with “Sterling”.
Equity Residential, a longtime power player in Berkeley housing, had wanted to sell the properties for years, putting them on the market in 2015. John Hyjer, first vice-president of investment for Equity, told Berkeleyside in a 2016 interview that the company wanted get out of student housing and focus on high-end urban properties.
At that point, Equity owned around 500 units in Berkeley, second to the Lakireddy family, which owns more than 1,000 units.
A sale of Equity’s Berkeley portfolio fell through in 2015 because of “lease issues,” Hyjer said at the time. At that time, the portfolio included entitlement rights to the 205-unit Acheson Commons, a then-undeveloped project along University Avenue between Walnut Street and Shattuck Avenue.
In 2016, Acheson Commons was sold separately to another Texas housing entity, Mill Creek Apartments, which has started construction and renamed it Modera Acheson Commons. Mill Creek is also the developer of the proposed 18-story tower building over the current Walgreens store in downtown Berkeley, at 2190 Shattuck Ave.
Equity withdrew its other properties from the market for a while. The current portfolio was put back on the market in April, Vasbinder said. The purchase, he said, “allowed us to scale up very quickly in a market that has historically had a very high barrier to entry.”
This barrier, he explained, is high real estate prices and few available properties. Dinerstein’s nearest development is a student housing complex being built in Davis.
“We are in the process of rebranding the [Berkeley] properties,” Vasbinder said. ” The vast majority of the units are occupied and leased, so those will stay as-is. As units become vacant and available they will be released at market rents. I cant confirm pricing, sorry.”
The properties have gotten new names and will now be called Sterling Addison, (ArtTech) Sterling Allston, (Gaia) Sterling Haste, (Fine Arts) Sterling Jefferson, (Renaissance Villa) Sterling Oxford (Berkeleyan Apartments) and Sterling University Ave. (Touriel Building).
Jordan Klein, the economic development manager for the city of Berkeley, estimates that the sale of the six properties could result in $4.4 million in transfer taxes to Berkeley. About $1.7 million of that is attributable to Measure P, which voters adopted in 2016. That increased the amount property owners paid in transfer taxes from 1.5% t0 2.5% for property sales over $1.5 million.
Berkeleyside asked for comments from Equity Residential and Mayor Jesse Arreguín but hadn’t heard back by publication.
This article has been updated to include new information about transfer taxes.