The property is the nine-story, 37-unit Buena Vista Apartmentsat 75 Buena Vista Ave. East, an Art Deco complex that was built in1931 and had not been on the market in 70 years. The locally basedMannion Trust, one of nine prospective buyers who made offers onthe property, bought it for $6.8 million from the Stirling Family,which had acquired it from the original developer in 1931.

Devincenti explains that the cap rate was unusually low fortoday's market primarily because expenses at the building runhigher as a result of its master-metered utilities, meaning thatthe building owner pays for the utilities. The buyer was willing toaccept the lower cap rate in part because Devincenti explained tohim that he will be able to increase rents and lower expenseswithin the next 12 to 24 months by understanding the rent controllaws and measures that can be pursued to increase the NOI generatedby the building.

For example, the rent control laws permit the new owner toconvert the electrical system to individual unit metering, whichwill lower his expenses. Although the new owner will not be able topass through electricity costs to existing tenants via theindividual metering, he will be able to do so when new tenants movein. "We showed him that 43% of the building had turned over duringthe past 24 months, so if that pattern of turnover continues, hewill be able to shift the utility costs to the tenants," Devincentisays.