Southern California buyer assumes 3.8% HUD loan on Central Valley property sold by Bay Area's Tesseract Capital Group.
A private family office from Southern California acquired The Marc at 1600, a 100-unit apartment community in Modesto, California, for $26.6 million. The seller was Tesseract Capital Group, a Bay Area firm. The Mogharebi Group brokered the transaction.
The property is located at 1600 Standiford Avenue and consists of one-bedroom and two-bedroom units averaging 798 square feet. The complex sits near major employers and retail including Standiford Square Shopping Center, Vintage Faire Mall, and Highway 99.
The deal included an assumable HUD loan carrying a 3.8% interest rate. "This property offered the buyer an exceptional opportunity to establish immediate scale and a meaningful foothold in one of the region's most competitive submarkets, supported by a loan structure that enhances financial efficiency in today's high‑rate environment," said Brian Nakamura, senior vice president at The Mogharebi Group.
Nakamura added that the buyer intends to maintain operational continuity for residents while optimizing backend systems to drive yield and elevate long-term asset performance. The Mogharebi team included executive vice president Otto Ozen, Nakamura, and senior vice president Nazli Santana.
"This transaction reflects sustained investor confidence in California's Central Valley and reinforces Modesto's position as a core market for strategic capital deployment," Santana said. "Investor appetite continues to be fueled by resilient renter demand, a strong regional employment base, and the city's advantageous proximity to both the Bay Area and Sacramento."
The Mogharebi Group specializes in multifamily investment sales and advisory services. Founded in 2016, the firm has closed over $10 billion of multifamily transactions, including $3 billion of deed-restricted affordable housing.
The Deployment Angle
Family Office Real Estate Daily Desk · our analysis, not the source's
The arithmetic favors direct acquisition when assumable debt is in play. At $26.6 million for 100 units, the price is $266,000 per door. With the HUD loan assumable at 3.8%, equity required depends on the loan balance—if the loan covers 70% of the purchase price, the family office writes an $8 million equity check and services $18.6 million of debt at roughly $71,000 per month. Current market rates for agency multifamily loans sit near 6.5%, so the 270-basis-point advantage translates to roughly $42,000 per month in avoided interest expense, or $500,000 annually.
That spread makes levered cash-on-cash returns competitive with unlevered yields on core-plus multifamily funds, and it shifts the risk-return trade-off toward direct ownership. Co-GP structures alongside a local operator remain viable if the family office wants exposure without asset management overhead, but the debt assumption here removes the refinancing risk that typically justifies paying a sponsor's promote.
Underwrite Modesto for job growth tied to Bay Area spillover and logistics expansion along Highway 99, not for rent growth matching coastal metros. The 798-square-foot average unit size skews toward workforce and entry-level renters, so model turnover at 40% to 50% annually and budget for unit refresh every three to four years. Price in property tax reassessment at the $26.6 million basis—California's Proposition 13 caps annual increases at 2%, but the step-up on sale resets the floor.
Avoid levering further or cross-collateralizing this asset with floating-rate exposure elsewhere in the portfolio. The 3.8% HUD loan is the return driver. If the loan matures inside the hold period, refi risk at prevailing rates could erase the yield advantage, so confirm the maturity date and any prepayment penalties before closing. The broker's language about "backend systems" and "operational continuity" signals the seller ran the property efficiently—verify that NOI wasn't propped up by deferred capex or under-market insurance.
