Ballast Investments and The Carlyle Group are doubling down on multifamily in San Francisco.
The joint venture between the two firms acquired the Grosvenor Court apartment building at 2055 Sacramento Street in Pacific Heights for $31.9 million, the San Francisco Business Times reported. The seller was an affiliate of San Francisco-based Grosvenor Properties, which owned the property for at least three decades.
The price for the 86-unit property works out to about $371,000 per unit.
The deal marks the third multifamily acquisition between local firm Ballast and Washington, D.C.-based Carlyle. The firms bought 1425 Taylor Street for $14.3 million and 1900 Washington Street for $11.6 million in June. The purchases totaled 74 units at $350,000 per unit.
Residential rental rates in San Francisco, already one of the country’s most-expensive markets, ticked up in recent months.
The city had the strongest annual rent growth in the country this summer. By this August, the city’s rental market had recovered the price losses brought on by the pandemic, according to Zumper.
The following month, rents exceeded pre-pandemic rates. Rent growth for a two-bedroom apartment was up 17.1 percent year-over-year, while one-bedroom rents were up 10.7 percent.
The increase in rents is attributable to return-to-office mandates, as well as an influx of residents working in the booming artificial intelligence sector.
As a result, capital partners like Carlyle have been warming back up to San Francisco. Besides Caryle, other institutional investors like Fortress Investment Group, Hines and DivcoWest have also gotten back into the market.
Grosvenor Court is a “classic San Francisco multifamily” property that is “positioned for growth in a recovering market,” Ballast co-founder and CEO Greg MacDonald said of the latest acquisition.
Ballast has more than 7,700 units in its portfolio nationwide. Earlier this year, the San Francisco-based firm was selected by a receiver to manage the Parkmerced, the largest multifamily property in the city with 3,221 units.
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