PANORAMA CITY, CA—Private Los Angeles investor Tobias Partners LP has sold an apartment complex to Los Angeles investor PJCF-T2 LLC for $22 million. The 201-unit property is currently generating below market rents, providing an opportunity for the buyer to gain additional income as the leases roll.
“With a per-unit price of just over $109,000, this investment presented an opportunity for the buyer to increase returns by gradually bringing rents up to market rates as leases expire,” Hamid Soroudi, Charles Dunn senior managing director, tells GlobeSt.com. Soroudi represented the seller in the transaction. “As the multifamily market in Panorama City, CA, and other key Los Angeles submarkets continues to tighten, value-add opportunities such as this one, are becoming harder to find,” he continues.
The multifamily market in the city, as Soroudi notes, is extremely tight with vacancy rates under 3% and no new development in the pipeline. This particular property was attractive both because of the market and because many of the units have been recently renovated by the seller, which positions it to generate higher rents. The buyer purchased the property at a 5.3% cap rate.
Located at 9010 Tobias Ave., the property has a mix of studios, one- and two-bedroom units. Onsite amenities include a swimming pool, fitness center, subterranean parking and controlled access.
At the recent Marcus & Millichap Multifamily Forum, lenders discussed the trend toward investors purchasing properties in secondary markets because yields were being crushed in the class-A space. Several of the panelists noted that they preferred redevelopment purchases and looked at properties that were positioned for rental growth, like this property.