Short Sale Ranks as County's Largest

The buyer was completing a 1031 tax-deferred exchange and "offered the highest certainty of closing due in part to their long-term ownership philosophy," according to Zander. He describes the Kensington as one of the premier apartment communities in Downey, with units averaging nearly 1,300 square feet, excellent amenities and more than $1 million in recent renovations.

The complex generated numerous offers from private families, regional investors and national operators, many of whom were attracted to the unique nature of the offering, according to the Hendricks brokers. Zander says that the selling price "reflects an absolute awareness of today's underwriting, fundamentals and capital markets." Casper adds that the buyer "recognized a unique opportunity to purchase a mid-sized asset in a market with very low ownership turnover combined with affordable rental rates in an excellent location."

Zander notes that the units are oversized and renovated and that the sales price of $114 per square foot was substantially below replacement cost. "This was a turnkey deal for a yield-driven buyer, who can expect cash flow approaching 10% at stability," he says.

The Kensington, situated on nearly two acres just minutes from the 5 and 605 freeways, features units of one to three bedrooms in four floor plans measuring from 970 square feet to 1,917 square feet. Common area amenities include a pool, a fitness center, a clubhouse, a spa and more. The in-place rents range from $1,000 to nearly $2,200 per unit. The complex has been very well maintained by the previous ownership, and the new owner plans only minor cosmetic upgrades to the 40-year-old property, according to the Hendricks brokers.

Greg Reed of Deutsche Bank negotiated new 10-year debt of $7.38 million at a fixed rate of 5.76% via the Fannie Mae DUS program. Zander and Casper note that, despite In today's challenging market, Reed was able to fund agency debt only 14 calendar days from the loan application.

According to Casper, the 605 Corridor remains desirable to most active investors intent on securing class B assets with long-term rental upside in historically robust class B submarkets. He notes that 14% of all jobs in the Southland can be found along the 605 Corridor and more than more than 80% of the employers are considered small business operators who form the backbone of the economy.