4771 Forman Ave.

BURBANK, CA-Private investors have acquired three properties in Burbank and one in Toluca Lake city totaling 102 units at cap rates ranging from sub-5% to 5.9% on in-place NOI and at per-unit prices from $164,000 to $400,000. Orbell Ovaness, VP of investments with BRC Advisors, tells GlobeSt.com that the deals illustrate the demand for core, cash-flow properties in the Tri-Cities market of Burbank, Pasadena and Glendale.

Ovaness and senior associate Cory Stehr of BRC represented the buyers of all four properties and the sellers of two of them, all of which were sold by private investors. Occupancy was between 95% and 100% on three of the properties, they said. Three of the deals were done off-market, Stehr noted.

The four properties were a 21-unit complex at 2908 W. Victory Blvd. that sold for $4.54 million, 23 units at 509-519 E. San Jose Ave. that sold for $3.75 million, 42 units at 225 W. Verdugo Ave. that sold for $7.985 million and 16 units at 4771 Forman Ave. in Toluca Lake that sold for $6.35 million.

225 W. Verdugo Ave.

The 2908 W. Victory property, called Victory Apartments, consists entirely of two-bedroom, two-bath units that average 1,000 square feet in a single building and was built in 1989. The buyer assumed a self-amortizing loan, at 60% leverage, at a low interest rate tied to the 11th District cost-of-funds index. The complex traded at a low cap rate that reflected the self-amortizing financing, Ovaness said. The property was listed with Hendricks & Partners.

The property at 509-519 E. San Jose Ave. was built in 1963 and consists of a mix of units from one to three bedrooms with one and two baths, in two buildings. Ovaness and Stehr, who represented the seller as well as the buyer, note that this property has some upside potential in raising rents that are below market levels.

The 225 W. Verdugo Ave. complex consists entirely of two-bedroom, two-bath units that average 1,000 square feet, in three buildings, and was built in 1986. The Forman Avenue property in Toluca Lake is one building that was built in 2009 as a $10 million luxury condominium project and traded in a short sale. It sold all-cash in a 30-day escrow from start to finish, Ovaness points out. He and Stehr represented the seller as well as the buyer.

The Forman Avenue project was encumbered with a $7.4 million bank loan, said Ovaness, who noted that the units are rented as apartments and the new owner plans to continue to operate them as apartments. The units are all two and three bedrooms with two baths and average 1,500 square feet, at rents ranging from $2,600 to $2,900.

Stehr describes the four sales as bread-and-butter deals for sophisticated operators who know the market and plan to operate the properties for cash flow for years to come. "There is limited downside, and there is some potential upside when rents eventually increase," he said. Ovaness added that rents have pretty much adjusted to economic conditions and that, "There is not much rent growth to come until a few years down the line."