WOODLAND HILLS, CA-Changing market conditions have led to the $44 million sale of a recently completed 85-unit luxury condominium project at 6203 Variel Ave. in Warner Center that the new owners will operate as apartments. Sobrato Development of Cupertino acquired the complex, called the Montecito, from Burbank-based Chandler Partners in a deal that was brokered by the Costa Mesa office of Chicago-based Moran & Co.

Moran vice president Brett Betzler, who brokered the sale along with president Mary Ann King, tells GlobeSt.com that the project presented an unusual challenge in that the newly built complex was designed as for-sale condominiums but was being marketed to apartment investors because of the slowdown in the housing market. In addition, he notes, the Montecito features unusually large units, which average 1,772 sf, compared to the average of about 950 sf for a typical apartment complex.

"With no floor plans in the market to comp to, sellers and brokers tend to project rents that are not really achievable," Betzler says. "Buyers have seen this over and over again, and want to know how you projected rents before they spend any time looking at your deal."

Moran "developed a methodology that buyers generally agreed with, which helped us to generate interest in the property," Betzler adds. By the time Chandler Partners completed construction of the project recently, Moran had the buyer lined up, and the sale closed upon completion of construction.

Dan Chandler, president of Chandler Partners, explains that the Montecito "was designed as a high-end, for-sale community, but the market changed direction during construction." Chandler adds that the property generated strong offers from apartment investors, commenting that , "When we did the math, the prospect of selling the project in bulk rather than marching ahead with the for-sale strategy was very appealing."

The Montecito comprises one five-story residential building over two levels of parking. The 85 units, situated on a 1.6-acre site, range from 1,562 sf to 2,256 sf, with high-end finishes such as Viking appliances, granite countertops, travertine flooring, marble tub surrounds, two-tone paint, crown molding and in-unit washer/dryers. It also has high-end common area amenities, such as a marble floor lobby, a fitness center, a movie theater, a sky deck, an internet café and a resort-style pool and barbeque area.

The Montecito's design and construction created unit interiors that are comparable to high-end single family homes in upscale locations, according to John R. Shenk, executive vice president and chief operating officer of Sobrato Development. He says that the softening of the condo market has created opportunities for investors like Sobrato to leverage their financial strength and expand their portfolios.

The Montecito's location is near the 5.3 million sf of office space in Warner Center and two blocks from the newly renovated 1.6-million-sf Westfield Topanga retail center in a redevelopment area that is transitioning from light industrial land uses to residential—all factors that will benefit the newly built complex, according to Shenk. Although several other apartment complexes are under construction in the vicinity, Shenk says that the Montecito "will have a lock on the top tier of the rental market in Warner Center" and will not compete directly with existing properties or the properties that are under construction.