BURBANK, CA—Interstate Equities Corp. has purchased as 34-unit distressed multifamily asset in Downtown Burbank. The investor plans to renovate and reposition the circa-1958 property, which has never before been renovated, and raise rents by $500 per unit. The purchase shows that well-located distressed assets are not extinct. The property was purchased off market.

“It has gotten hard to find properties like this,” Peter Casey, director at IEC, tells GlobeSt.com. “We really rely on our broker network, so the idea of leveraging these owners on the ground is the way we really go about it.” Marshall Boyd, president of IEC, adds, “There is no shortage of high net-worth capital or institutional capital chasing value-add deals where you can transform cash flows over a relatively short period of time. If this property had come to market, there would have been a number of interested buyers.”

IEC purchased the property, located at 700 S. 6th Street in Burbank, for $6.7 million, or approximately $197,000 per unit. Through its renovation plans, the company will upgrade the interior units, add a central courtyard and add a rooftop lounge area. “We plan to pretty substantially renovate the interiors of the building, and just generally bring the asset to the standard in the area. In doing so, it is a pretty big transformation,” says Peter. The property is walking distance from Downtown Burbank and is currently 100% occupied. IEC plans to hold the property for three-to–five years and renovate the interior units as leases roll.

“The property really represents the core of IEC investments over the past 35 years,” says Boyd. “It is mid-sized; it has never been renovated; it is in a fantastic location; and we bought it off market. We are really proud that this deal looks like the deals we did 20 years ago as a firm.” IEC purchased the property with discretionary capital from its fund 11, an institutional investment vehicle. Although Boyd and Casey could not comment of the exact numbers, they said that the fund generates healthy returns for its investors.

The Burbank submarket is known for its job centers, specifically entertainment companies, and the submarket has a strong demand for quality office assets. Earlier this year Worthe Investment sold two such properties to two separate buyers for a total of $48 million.