Harris says that during the three-week marketing campaign for the property, over 150 confidentiality agreements were executed and there were more than 40 property tours, resulting in more than 20 initial offers on the complex. The buyer closed in one week on an all-cash basis after a short due diligence period and plans to institute a premium-level renovation program at the property, where the sellers had already invested $2 million in renovations in recent years. The deal closed at a 5.4% cap rate, based on trailing 12-month financials.
The Madison Rancho Palos Verdes, located at 6507 and 6510 Ocean Crest Dr., consists of two separate buildings that were built in 1970 and 1973. The property was 98% occupied at the close of escrow.
Harris and Smolen note that 56% of the units have ocean views, the complex is adjacent to a nature preserve, and the apartments average more than 1,200 square feet.
Harris says that the factors that generated strong investor interest in the property—in addition to its location and the high barriers to entry in Palos Verdes—included a median household income of $119,500 per year, well above neighboring cities andthe metro median, as well as a median home price that reached $1.2 million in 2009. The home prices "make it difficult for many people seeking to live on the peninsula to afford homes in the city, which will bolster apartment demand through the foreseeable future," the Harris team noted in its marketing materials for the property.
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