SANTA MONICA, CA—A rare value-add apartment complex has traded hands in Santa Monica. Acting as a sponsor for an unnamed local investor, Optimus Properties purchased the 25-unit oceanfront apartment complex from a family trust for $15.56 million in an all-cash transaction. The seller, who had owned the property since the 1980s, sold the complex as part of a court order.

“We not only had a Santa Monica address but an Ocean Avenue address,” Kitty Wallace, of Colliers International, who, along with her sales team, represented both the buyer and seller in the transaction, tells GlobeSt.com. “Properties on the ocean with an unobstructed view don't trade very often. You could say that this was one of the most rare sights in all of the US.” As a result, Wallace got a tremendous amount of interest on the property, receiving upwards of 100 calls per day from the start of the marketing process through closing, totaling thousands of potential buyers. “It was interesting because we went to the market un-priced, and we got a few offers that were really low,” she says. “Once we started developing a range, we went through cycles and kept raising the bar. We did it that way, because, honestly, I could have received 500 offers.”

Because this was a court-ordered sale, all of these buyers needed to adhere to a very specific set of criteria, which ultimately helped to weed out the crowd. “In this circumstance, we had a mandate that all offers had to be non-contingent, have a 5% deposit and had to close in 14 days. And, they had be able to do all of that without getting a site survey, without getting the soil checked, and all of the other due diligence.” Additionally, once the buyer was selected, they had to go to court to purchase the property, where there was a chance of being out-bid by another buyer. Wallace said one another bidder did show up on the court date, cashier's check in hand, but ultimately, the original buyer won the property.

The garden-style property was originally built in 1953, and the buyer plans to perform an extensive renovation on the property. It will update and modernize the exterior and landscaping, and update each unit as they become vacant. According to Wallace, the property is currently collecting average rents of $3,800, but after the renovation, these rents could skyrocket between $5,800 and $7,000.

Properties like this are rare and come on the market about once every seven years or so, but when they do, they always draw a crowd. “There is also a lot of buzz about Santa Monica, but also a lot of unknowns as far as what you can do with rent control and development, so a lot of people had these grandiose ideas, but at the end of the day Santa Monica has really specific guidelines that you have to follow,” Wallace explains. “Because we had such a strong marketing campaign, we had a lot of people come who were unaware and that we had to help educate.”

While the multifamily market in Santa Monica is tight, investors are finding opportunities in the office sector, especially for low-rise office properties. A local investor, for example, just purchased Ocean Park Plaza for an estimated $47 million from Broadreach Capital. The property was recently renovated to the tune of $3 million to attract the influx of media tenants in the area.