LOS ANGELES—The sale of a two-property multifamily portfolio with an above average gross rent multiplier generated multiple offers, showing the high demand for multifamily product. The multifamily properties in the portfolio are located in North Hollywood and Van Nuys, and received between six and eight offers each, despite the high GRM of 13.4 and 13.72, respectively. The average GRM in the San Fernando Valley is 12.1.

“There is huge demand in the marketplace, and these were somewhat newer properties, meaning that they are not the 1960s vintage typical in the area,” Warren Berzack, president of Berzack Investment Property Advisors, a multifamily specialty group of Lee & Associates, tells GlobeSt.com. “We marketed the properties for between two and three weeks and had between six and eight offers on each property from a combination of exchange buyers, syndicators and private investors. We picked the buyer because of their financial wherewithal, because they owned several other properties in close proximity and because we determined that they would not play games in terms of coming back and asking for credits or price reductions to remove contingencies.” Berzack represented the seller, an unnamed private investor, and buyer, a private equity investor, in the transaction.

Both properties did offer a significant 20% upside, which likely helped to fuel interest, according to Berzack, who also notes that the size of the properties and the location also played a role in attracting offers. “Valley Village has had tremendous growth in the last few years, both in terms of demand and rents. These properties are located just outside of that pocket,” he adds. Although there is a significant rental upside and a value-add play, the buyer, who owns 1,000 units in the area, is not planning any major renovations, but will lightly renovate the interior units as leases roll.

Located one mile apart at 6115 Whitsett Ave. in North Hollywood, CA and 13019 Oxnard St. in Van Nuys, CA, the properties have a total of 62 units. The two properties traded hands for $11.2 million.

Multifamily supply in these markets is tight, and as a result other CRE sectors are expanding. Earlier this year, for example, a developer announced plans to bring a boutique hotel to the area.