AEW Capital Management and State of Wisconsin Investment Board have formed separate joint ventures with Essex Property Trust.

The partnerships give the two institutional investors stakes in an existing, $888m (€645m) West Coast apartment portfolio.

AEW has taken the largest part of the portfolio with nine properties totaling 2,723 units in Southern California and Seattle areas.

Dan Bradley, AEW director, said: “The assets we purchased allowed us to buy into a high-quality portfolio in markets that we like.

”The properties are located in areas that have high housing costs and strong barriers to entry which keeps demand for apartments at a high level.”

Bradley added that high-level income returns appealed. “Our income yield on this transaction on a leveraged basis was 7%,” he said.

“We think that this is very good in comparison to the 3% to 4% cap rates that are being paid for many apartments in major West Coast markets.”

AEW applied 55% leverage to the transaction. Occupancy on the properties, built between the 1970s and 2004, is 96%.

AEW bought the assets for its open-ended Core Property Trust fund. The fund’s total assets were valued at $5.6bn at the end of March.

SWIB, meanwhile, bought apartments for two existing ventures it has with Essex. For its Wesco IV venture, the pension fund bought a portfolio of five apartments totaling 1,116 units in northern and southern California. Formed earlier this year, there is $160m of equity in the venture, with 50% coming from SWIB.

The Wesco III venture bought three properties in southern California totaling 336 units. Essex and SWIB formed Wesco III in 2012 with a total equity investment of $120m.

All of the properties in the joint venture were previously owned by BRE Properties, which Essex bought last month for $16.2bn.