BURBANK, CA-Pacific Property Co. of Palo Alto has acquired the 82-unit Waterstone at Media Center apartment complex at 325 N. Buena Vista St. for $16.25 million in a value-added play designed to capitalize on the property's below-market rents and its location in the Burbank Media District. Dave Casper of the West Los Angeles office of Hendricks & Partners tells GlobeSt.com that the acquisition offers unusually high potential for raising rents to market levels.

According to Casper and partner Karoline Sauls of Hendricks & Partners, who brokered the deal, current rents lag behind market rates by 47%. Casper and Sauls calculate that the stabilized cap rate for the deal, at the end of year two, will be approximately 6.5%.

Pacific Property bought the Waterstone from a locally based private investor who had owned the complex for many years and who fulfilled three individual 1031 exchanges via the deal. The Waterstone becomes the latest in a series of multifamily acquisitions in Southern California by Pacific Property.

The acquisition "fits squarely within our target investment criteria," comments Rory Gardner, managing director for Pacific. He adds that the company looks for "quality assets with rental upside" in desirable markets close to employment centers.

The Waterstone complex, formerly known as the Sante Fe Apartments, consists of three adjacent complexes that were built in the late 1980s. The three complexes comprise 24 singles, 34 one-bedroom and 24 two-bedroom units.

According to Casper and Sauls, the acquisition provides the buyer with "a tremendous opportunity to improve a relatively new property in the Media Capital of the World within a chip shot of Walt Disney Company, NBC Studios and Warner Bros." Casper tells GlobeSt.com that the price translates to $198,171 per unit and $271.18 per reported net rentable square foot.