Why did Walker & Dunlop sell Preserve at Melrose for $185 million?

On December 9, 2024, a significant real estate transaction was completed as Walker & Dunlop, Inc. orchestrated the sale of Preserve at Melrose for $185 million, marking one of the largest single-asset transactions within San Diego. The property, with 410 residential units and constructed in 2015, is ideally located in Vista, an attractive north county neighborhood within the San Diego area. Its strategic positioning near key transportation corridors enhances its appeal, with direct access to major employment hubs along State Route 78. The buyer in this transaction was Mesirow, a notable player in the real estate investment space, while the seller was a San Diego-based group. The deal is particularly noteworthy as it stands as the second largest single-asset transaction in San Diego for 2024 and the fifth largest throughout California this year. Hunter Combs, managing director of Investment Sales at Walker & Dunlop, emphasized that San Diego remains a prime target for investors, grasping 10% of all U.S. multifamily transactions exceeding $150 million and 23% of those in California alone in the year-to-date figure since 2023. This ongoing investor interest is bolstered by the city's continuous rent growth, solid economic fundamentals, and considerable barriers to market entry that protect property values and investment returns. The strong investment activity in the San Diego region can be can be attributed to various factors, including an influx of life sciences industries surrounding UCSD and the establishment of major tech firms in the area. Moreover, the longstanding defense industry further contributes to the market's resilience, making it attractive for investors looking to maintain a strong portfolio in multifamily properties. Alasdair Cripps, the CEO of Mesirow Institutional Real Estate Direct Investments, commented on the purchase, expressing excitement over the expansive amenities and transit-oriented location of Preserve at Melrose. This property is indeed positioned to serve local communities well and offers easy access to employment centers. Walker & Dunlop’s involvement highlights its role as a leading provider of capital in the U.S. multifamily market, as evidenced by their remarkable origination of over $24 billion in debt financing in 2023, including lending over $20 billion specifically for multifamily properties. The company aims to create communities that offer spaces where people can live, work, shop, and play, emphasizing its commitment to shaping vibrant neighborhoods and enhancing community living. In summary, the sale of Preserve at Melrose not only reflects the healthy market dynamics in San Diego but also showcases the active participation of institutional investors like Mesirow, as they took note of the favorable attributes of the property and its strategic location within a growing market. This transaction is indicative of a larger trend in the multifamily real estate sector where investment opportunities continue to align with urban development goals, ultimately contributing to the growth of both the economic landscape and community infrastructures.