Waterford Residential plans to upgrade common areas now that it’s acquired Dover Heights Apartment Homes in Newport Beach, a collection of 66 units, for $30.6 million. (Courtesy: Dover Heights Apartment Homes)

Dover Heights Apartment Homes in Newport Beach, a collection of 66 units, recently sold for $30.6 million. (Courtesy: Dover Heights Apartment Homes)

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Waterford Residential, owned by Sean Rawson and John Drachman, bought Dover Heights Apartment Homes in Newport Beach, a collection of 66 units, for $30.6 million. (Courtesy: Dover Heights Apartment Homes)

Dover Heights Apartment Homes in Newport Beach, a collection of 66 units, recently sold for $463,000 per unit and $474 per square foot. (Courtesy: Dover Heights Apartment Homes)



Orange County apartments continue to been seen as a hot property, with selling prices up 14 percent in 2018.

Take Dover Heights Apartment Homes in Newport Beach, a collection of 66 units that’s closer to the 17th Street shopping district than the city’s famed waterfront. These apartments recently sold for $30.6 million — or an eye-catching $463,000 per unit and $474 per square foot, according to the Kidder Mathews brokerage, which handled the deal.

Like individual homes, Orange County’s rentals are pricier purchases. The average price paid per unit countywide last year hit $301,000 — up roughly 14 percent in a year, according to a report by the Marcus & Millichap. Rental complexes in southern beach communities sold “often exceeding $400,000 per unit.”

Dover Heights Apartment Homes isn’t a typical complex. Broker Steven Brombal of Kidder Mathews says the seller over a 27-year period acquired nine separate contiguous parcels from seven owners to create this apartment collection on 2.24 acres. That makes it a large asset for its neighborhood, and when it went on the market, multiple offers were made.

The buyer was investor Waterford Residential, owned by Sean Rawson and John Drachman. “The opportunity to acquire an asset of this size and scale in such a high barrier to entry market is remarkable,” said Rawson.

One lightly discussed reason Orange County rents are so high: Investors continue to pay top-dollar for apartment complexes.

Yes, the economy remains hot as job creation outpaces new rentals development. In fact, Marcus & Millichap estimates landlords added 735 fewer apartments to their supplies in 2018 than 2017. That helped local landlords countywide keep their properties 96.2 percent full — up 0.3 percentage points in a year.

Renters’ limited options mean Orange County’s average effective rent rose by 3.3 percent in 2018 to $2,069 monthly, Marcus & Millichap reports, “powered by robust gains in the beach communities.”

Newport Beach is one of Orange County’s hottest apartment markets, according to Marcus & Millichap. The city had the strongest rent growth countywide last year, up 7.6 percent to an average $2,801 per month — the county’s highest.

Those kind of numbers attract investors that drive up prices.

Waterford, based in Irvine, bought an 18-unit collection next door to Dover Heights early in 2018 for $8 million, or roughly $444,000 per unit. And ponder this appreciation: MultiHousing news reported TH Real Estate bought the 250-unit Avana San Clemente late last year for $92.5 million, or $370,000 per unit. The complex previously sold for $31 million, or $123,970 per unit, in 2015.

New owners often quickly upgrade their new assets in hopes of quickly recouping their investment by luring a higher-paying tenant. Waterford will be no exception at Dover Shores. It plans to add everything from washer/dryer hook-ups to outdoor community areas.

“We are excited to position this asset at the top of the Dover Shores submarket and maximize its potential,” added Drachman.