Behringer JV Buys New Apts. from Standard Pacific

MARINA DEL REY, CA-Standard Pacific Homes has sold a newly completed 140-unit luxury residential development in this affluent beach community to a joint venture led by Behringer Harvard Multifamily REIT I and PGGM Private Real Estate Fund, a real estate investment vehicle for real large Dutch pension funds. The property, which is currently unoccupied, was originally intended to be a for-sale development. None of the parties involved has divulged the purchase price for the property, which is still awaiting lease-up. The asking price was $70 million, or $500,000 per unit, according to an investment flyer by the California office of Moran & Co., which had the disposition assignment.

Covering 2.5 acres at 4055 Redwood Ave., Forty55 Lofts consists of 140-units in two-four-story buildings around a resort-style pool area with barbeques, a fire pit, and a decorative water feature. Residents also have immediate access to a 22-mile bike path running from Malibu to Redondo Beach. The units average 1,306 square feet and have 10- to 20-foot ceilings, oversized windows, large patios and high-end kitchens.

The investment flyer said the $70-million asking price was the result of capping the stabilized first-year pro forma at 5.0%, and then subtracting $2.5 million in lost revenue and other expenses associated with leasing up. It represents an 8.2% unleveraged IRR or a 10.4% leveraged IRR over a 10-year hold, assuming a 10-year rate of 6.0% and a debt service coverage of 1.25, according to the flyer, which listed rents in the $2,500- to $3,000-per-month range for adjacent developments. The sale closed toward the end of September. A spokesperson with Behringer Harvard declined to comment on the investment much beyond its press release.