WESTMINSTER, CA-The sale of a small apartment complex here hit big numbers, with the $2.13-million deal closing at $355,000 per unit and a 4% cap rate in one of the highest prices and lowest caps on record for a comparable property. Steven Brombal of the Newport Beach office of Hendricks & Partners, who brokered the deal between the private parties, tells GlobeSt.com that the sale of the complex of six custom units represented one of the highest priced small cap deals in Orange County.
The units, at 7862 & 7872 12th St., are all three-bedroom floor plans with two and a half bathrooms in a townhome-style configuration. Each unit features an attached three-car garage and each measures 1,269 sf over two stories with an enclosed patio/small yard, central air and heat, washer/dryer hook-ups, alarm, walk-in closets, fireplace and separate hot water heaters.
Built in 1992, the units sold for $279.75 per sf, which Brombal notes is "a 3.4% actual cap rate and an 18.8 gross rent multiplier." The property attracted five offers, with the ultimate buyer a residential broker with a partner who represented himself.
Since the buyers were financing with such a high rate of leverage, a 90% loan-to-value, Brombal says he structured the deal with a $500 per day late penalty if the deal did not close on schedule. "Especially in this changing investment real estate market," Brombal tells GlobeSt.com, he was concerned that the high-leverage financing might not fly. The penalty netted the seller an additional $7,500 that was not represented in the sales price.
The property is two adjacent identical triplexes sharing one common center concrete driveway. "Although they are separate, legal adjacent buildings each with there own separate assessor's parcel number, the real value is to own them both," says Brombal.
The seller required that the two properties be sold together, and the buyer was required to obtain two loans, but any owner has the flexibility to sell them separately. Brombal also brokered the sale of the property when the original developer sold it to the private investor who was the seller in this recent deal.
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