COVINA, CA—Multifamily values are continuing to skyrocket across Los Angeles submarkets, and in Covina, they are nearly breaking records. Sares Regis Group's value-add fund II has purchased Vista Pointe, a 216-unit apartment complex, for one of the highest prices per unit ever paid in the submarket. The purchase price and the name of the seller were not officially disclosed, however, sources unrelated to the deal tell GlobeSt.com that Henderson Global sold the property to Sares Regis for $45 million.

The property was fully marketed for three weeks, and drew tremendous interest from investors, eventually generating 14 strong offers. “It was a very good time in the market to sell a building that has a very strong value-add component, which this building did,” Margie Molloy, senior director at Berkadia, tells GlobeSt.com. “The property was very stable, and is one of the nicest buildings in the submarket. It was widely marketed and had 14 offers, and the bidding process was very competitive. I think that spoke really well for the submarket that it is in and the uniqueness of that property.” Molloy represented the seller in the transaction along with Berkadia managing directors Adrienne Barr and Robin D. Ossenbeck.

There is a healthy upside to the property. Rental rates in the area have increased 6.4% since last year and, as of June, averaged $1,785 per month. “The building is in a very strategic location right where the 210, 71 and 10 freeways intersect and it has accessibility to a tremendous number of employers, but it is in a submarket that has had no new construction since the 1980s,” says Molloy. “For the buyer, it makes perfect sense to go in and upgrade this property so that attracts a higher income resident profile that is supported by that job growth.”

The buyer plans to perform a capital improvement plan to upgrade the interior units and the common areas. The property has a mix of one- and two-bedroom floor plans, and includes a wide range of amenities: two swimming pools, spas, two tennis courts, a business center, a fitness studio, barbecues, laundry rooms, 24-hour emergency maintenance, and a controlled-access gate. “The property also had a tremendous amount of parking, which was attractive to the buyer, because most of what they directly compete with is under parked,” says Molloy. It is currently 95% occupied.

Value-add properties generate high competition when they come to market. For the buyer to stay competitive, it was aggressive on pricing and flexible on terms, and has a reputation for performing—which ultimately clinched the deal. This is the firm's second value-add fund. It closed another fund earlier this year with $114 million and purchased nine properties on the West Coast.