Investment Overview

The offering of Sterling Pointe Apartments presents a tremendous opportunity to acquire a stabilized 57-unit student housing property with turnkey management located 1-mile due north of the UC Davis campus in Davis, CA. The property, which generated over $1,400,000 in gross income in 2023, has historical occupancy of 99%+, and as of July 2024 is already 90% pre-leased for the Fall university term. The Davis market is notoriously undersupplied due to the influx of over 40,000 students for each full year term. On campus housing is only sufficient to accommodate up to 13,000 members of the student population, leaving over 27,000 students to find alternative options off campus. Due to this supply/demand dynamic, Davis is consistently the best performing apartment market in the Sacramento MSA. Sterling Pointe’s current ownership has invested heavily in the property, remodeling 46 of the 57 units, replacing all the decks and deck railings in 2019, replacing the roofs and repairing the three boilers in 2023, replacing all electrical subpanels and a large section of sewer lateral in 2024, and upgrading the common lounge and fitness room. Further enhancements could be made by a new owner that drive rents, including remodeling the remaining 11 non-remodeled units. Completing these unit remodels and improving the rents to match the demonstrated high rents at the property should generate approximately $170,000 per year in additional gross income. Sterling Pointe ownership has managed the property to maximize occupancy and has historically set asking rents lower than the nearby competition. This provides an opportunity for a new owner to capture further upside by setting asking rents closer to the competitive property set, which are as much as 10% higher. Prospective buyers who qualify may be able to assume the current low interest rate loan, due in August 2026, providing the opportunity to maximize initial cash flow and facilitate a refinance at a point in time when interest rates are expected to be much more attractive than the prevailing rates in today’s market.