The purchase price equates to $250,000 per unit and $355 per sf. Prometheus executive John Milham says his company will sit on the property for up to 24 months while it decides whether to substantially renovate the asset or scrape and redevelop the site with 210 for-sale townhomes, a project for which it already has been entitled. "We're sort of wait and see," he says.

The seller was Newport Beach-based Lyon Apartment Cos., a unit of Lyon Capital that was represented by Arroyo & Coates founder Curtis Gardner and fellow A&C brokers Mark Leary and John Downing. Due to its redevelopment potential, pure residential developers had the property under contract prior to Prometheus but could not close the deal, according to sources familiar with the property.

Milham says one of the risks in the deal is that the condo map for the townhomes has not yet been recorded. Prometheus used a five-year loan to acquire the property. Advantageously, debt rates fell 110 basis points while the company had the property under contract, Milham says.