Fremont property deal shows Silicon Valley strength amid coronavirus

FREMONT — A big apartment complex in Fremont has been bought
by a veteran Southern California real estate firm in a deal that
suggests investors still hunger for Silicon Valley properties
despite the uncertainties ushered in by the coronavirus.

Rancho Luna Sol, a 188-unit apartment complex located a short
distance from the BART station in central Fremont, has been bought
by Decron Properties, a large real estate firm that owns about
8,600 apartment units along with roughly 1 million square feet of
office and retail space in California and Washington state.

“Commercial real estate investments in the Bay Area are both
rewarding and very comforting,” said David Nagel, chief executive
officer of Decron Properties. “They are comforting because of the
tremendous job story in the Bay Area.”

Decron paid $71.5 million for the apartment complex, the buyer
said. Mark Leary, a broker with Newmark Knight Frank, a commercial
real estate firm, advised both the buyer and the seller in the
deal.

Los Angeles-based Decron is well aware of the dreadful economic
downturn that has engulfed the Bay Area, along with the rest of
California and the nation as a result of business shutdowns imposed
by state and local government agencies in a quest to curb the
spread of the deadly bug.

“The job market and the economy all over the world are very
concerning,” Nagel said.

Despite the fierce economic headwinds, Decron is confident that
its Fremont investment will pay off.

“With the lack of stability in the market today, Decron should
be commended for focusing on the long term potential this
property,” Newmark Knight Frank broker Leary said.

To accomplish the purchase, Decron raised $26.5 million in
equity financing. That created a large enough stake to entice
Citibank to provide an interest-free loan to bankroll the
transaction, according to the buyer.

“It’s actually very hard to pull off deals today because
it’s hard to raise the equity and it’s hard to raise the debt
to buy properties,” Nagel said.

Decron was obliged to demonstrate to lender Citibank that Decron
was willing to risk a major stake in the Fremont apartment
complex.

“Without our balance sheet to give comfort to the lender, this
deal could have fallen apart,” Nagel said.

In the Bay Area, Decron owns apartment complexes in Emeryville,
Walnut Creek, San Jose, and Mountain View, along with Fremont. The
company hungers for more real estate in the region.

“We are looking throughout the Bay Area for more
opportunities, both in Silicon Valley and the East Bay,” Nagel
said.

Source: FS – All – Real Estate News 1
Fremont property deal shows Silicon Valley strength amid
coronavirus