BURBANK, CA-Pacific Property Co. of Palo Alto, CA, one of California's most active value-added apartment investors, has sold the Park Place Apartments to RW Selby & Co., a West Los Angeles-based buyer and developer of upscale apartment complexes.
The buyer paid close to $12.5 million for the property, according to Karoline Sauls and David Casper of the West Los Angeles office of Phoenix-based Hendricks & Partners. Sauls represented the seller and Casper represented the buyer.
The 82-unit, class A property is at 355 N. Maple St., a prime location near the Warner Bros. Ranch lot and NBC Studios in the Burbank Media District. The deal closed at a 6.4% cap rate at the current actual rents at the complex, Casper says, but the property would generate an 8.04% cap rate at market rates. Actual rents, which are more than 20% below market rents, average $1,043 per month, compared with a market average of $1,313.
Casper tells GlobeSt.com that the seller realized a profit after holding the property for less than 18 months and renovating it, but he adds, “the buyer has the potential for untapped upside through a Tier II renovation that could further upgrade the complex.” He explains that typical improvements in such a renovation might include wainscoting, new counter tops in kitchens and bathrooms, new doors and hardware, upgraded carpets and the like. “The buyer is a long-term investor,” he says, “and a renovation like that can be very attractive to patient investors looking at seven-year-plus holds.”
Park Place, built in 1985, was 95% occupied at sale time. The apartments, which average 800 sf, include 32 one-bedroom townhouses with 1 1/2 baths; 18 one-bedroom, one-bath units, 16 two-bedroom, two-bath units; and 16 studio apartments. The three-story complex is wood frame and stucco construction with mansard roofs.
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