Equity Residential Buys Prime Rental Complex

By Morris Newman

Print Email Share Reprints News Tip? Get Alerts

Sold to Equity Residential:
The 174-unit Encore at Sherman Oaks

(Mark Your Calendars: RealShare Apartments East, February 15^th in Washington, DC).

SHERMAN OAKS, CA-Equity Residential has paid an undisclosed sum for the the Encore at Sherman Oaks, a 174-unit apartment complex in this affluent Los Angeles neighborhood. AEW Capital Management LP sold the asset on behalf of an institutional client.

Although the sale terms were not made public, the cap rate was in the 4.5-4.75% range. The “compressed” level of that cap rate indicates the high demand for institutional-grade multifamily assets in this tight market. Built in 1988, the complex is 95% occupied.

Greg Harris, Kevin Green and Joseph Grabiec of IPA, an institutional investment division of Marcus & Millichap, represented both buyer and seller in the transaction.

The purchase price was below replacement cost, according to Harris. “It’s difficult to find land of a comparable size in this densely developed neighborhood,” he says.

The sale also has a value-added component, he adds. “There’s a clear opportunity to renovate the units and capture a higher rental demograph,” he says. “The value added side was a component to this sale.”

The Encore at Sherman Oaks is a “classic institutional investment,” says IPA’s Green. Location is one factor that gives the project value, he adds. “The property is surrounded by a very strong and growing job base, including the entertainment industry, in nearby Studio City, Burbank, Hollywood and West L.A.” 

A location within walking distance of a regional shopping and the 101 Freeway is “the second key driver” in this sale, says Green.

The four-story building contains many amenities, including a swimming pool and spa, racquetball and basketball court, fitness center, business center and gated underground parking.

Categories: West, Multifamily, Acquisitions/Dispositions, Los Angeles