(Read more on the multifamily market.)

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WOODLAND HILLS, CA-Changing market conditions have led to the$44 million sale of a recently completed 85-unit luxury condominiumproject at 6203 Variel Ave. in Warner Center that the new ownerswill operate as apartments. Sobrato Development of Cupertinoacquired the complex, called the Montecito, from Burbank-basedChandler Partners in a deal that was brokered by the Costa Mesaoffice of Chicago-based Moran & Co.

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

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

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

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

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The Montecito comprises one five-story residential building overtwo 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 asViking appliances, granite countertops, travertine flooring, marbletub surrounds, two-tone paint, crown molding and in-unitwasher/dryers. It also has high-end common area amenities, such asa marble floor lobby, a fitness center, a movie theater, a skydeck, an internet café and a resort-style pool and barbequearea.

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The Montecito's design and construction created unit interiorsthat are comparable to high-end single family homes in upscalelocations, according to John R. Shenk, executive vice president andchief operating officer of Sobrato Development. He says that thesoftening of the condo market has created opportunities forinvestors like Sobrato to leverage their financial strength andexpand their portfolios.

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The Montecito's location is near the 5.3 million sf of officespace in Warner Center and two blocks from the newly renovated1.6-million-sf Westfield Topanga retail center in a redevelopmentarea that is transitioning from light industrial land uses toresidential—all factors that will benefit the newly built complex,according to Shenk. Although several other apartment complexes areunder construction in the vicinity, Shenk says that the Montecito"will have a lock on the top tier of the rental market in WarnerCenter" and will not compete directly with existing properties orthe properties that are under construction.

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